^ 


THE -TARIFF  HISTORY 


OF  THE 


UNITED  STATES- 


BY 

F.  W.  TAUSSIG,  LL.B.,  PH.D. 

4k 

HENRY   LEE   PROFESSOR  OF  ECONOMICS     IN   HARVARD   UNIVERSITY 


SIXTH  EDITION 

REVISED,  WITH  ADDITIONAL  MATERIAL,  INCLUDING  A  CONSIDERATION  OF 
THE  TARIFF  OF  1913 


G.  P.  PUTNAM'S  SONS 
NEW  YORK  AND  LONDON 
fmicfcerbocfcer  Dress 
1914 


COPYRIGHT,  1892 

BY 
G.  P.  PUTNAM'S  SONS 

SIXTEENTH    IMPRESSION 

COPYRIGHT,  1910 

BY 
G.  P.  PUTNAM'S  SONS 

COPYRIGHT,  1914 

BY 

G.  P.  PUTNAM'S  SONS 


Ubc  fmfcfterbocfeer  press,  t*ew  -Kocbelle,  H.  ». 


NOTE  TO  THE  FIR£T  EDITION. 


OF  the  papers  printed  in  this  volume  none  is  now 
presented  to  the  public  for  the  first  time.  The  essay  on 
"  Protection  to  Young  Industries  as  Applied  in  the 
United  States  "  was  first  published  in  Cambridge  in  1882, 
and  was  republished  in  a  revised  edition  in  New  York  in 
1883.  The  paper  on  "  The  Tariff  of  1828  "  appeared  in  the 
Political  Science  Quarterly  for  March,  1 888.  That  on  "  The 
History  of  the  Tariff  between  1830  and  1860  "  was  printed 
in  the  Quarterly  Journal  of  Economics  for  April,  1888. 
"  The  History  of  the  Present  Tariff  "  was  published  in 
New  York  in  1885.  All,  however,  have  been  revised  for 
the  p.esent  volume,  and  considerable  additions  have  been 
made.  I  have  avoided  repetitions,  so  far  as  this  was 
possible,  and  have  attempted  to  connect  the  narrative  of 
the  separate  parts.  Although  not  originally  written  with 
the  design  of  presenting  a  complete  history  of  our  tariff 
legislation,  these  papers  cover  in  some  sort  the  entire 
period  from  1789  to  1887. 

F.  W.  T, 

CAMBRIDGE,  MASS.,  July,  1888. 


292280 


NOTE  TO  THE  SIXTH.  EDITION 


IN  the  present  edition,  the  narrative,  which  in  the  previ- 
ous editions  had  been  brought  to,  date  for  the  successive 
tariff  acts,  is  again  brought  to  date  by  adding  a  chapter 
on  the  tariff  of  1913.  The  text  of  the  earlier  chapters, 
particularly  that  on  the  tariff  of  1909,  has  also  been 
revised. 

The  act  of  1913  makes  the  greatest  change  in  our  tariff*^ 
system  since  the  civil  war.  It  reduces  very  considerably 
the  duties  on  almost  all  manufactures;  it  admits  wool  and 
sugar  free  of  dilfy ;  on  many  articles  it  substitutes  moder- 
ate ad  valorem  for  high  specific  duties.  It  does  not  mean 
free  trade;  but  it  does  mean  a  great  lowering  of  protec- 
tion. Whether  it  will  be  left  to  work  out  its  effects  with- 
out early  amendment  remains  to  be  seen ;  still  more, 
whether  its  effects  will  be  considerable,  and  whether  they 
will  be  for  the  country's  good.  As  I  have  stated  more 
than  once  in  these  pages,*the  industrial  consequences  of 
protective  duties  are  commonly  exaggerated  in  popular 
discussion.  The  new  tariff  will  cause  no  disaster,  and  it 
will  work  no  wonders ;  but  we  may  hope  that  in  the  long 
run  it  will  brace  and  strengthen  the  country's  industries, 
and  make  it  easier  to  frame  future  duties  without  log- 
rolling or  manipulation. 

F.  W.  T. 
CAMBRIDGE,  MASS.,  December  10,  1913. 


CONTENTS. 


PART   I. 

PACK 

CHAPTER  I. — Protection  to  Young  /Industries  as  Applied 

in  the  United  Slates '        1-67 

I.- — The  Argument  in  General. — Conditions  under  Which  it 
Applies. — These  Conditions  Existed  in  the  United 
States  Early  in  the  Present  Century. — Probably  do 
not  now  Exist  .......  1-7 

II. — Industrial  History  of  the  Colonies  and  of  the  United 
States  before  1808. — Condition  of  Foreign  Trade. — 
Public  Opinion  on  Protection  and  the  Tariff  of  1 789. 
— Restrictive  Measures  of  1808-1815  and  Their  Effect. 
— Tariff  of  1816. — Crisis  of  1818. — Manufacturers  in 
Better  Position  after  1819. — Strong  Protective 
Movement  Begins  ..*....  8-24 

III. — The  Cotton  Manufacture. — First  Factories. — Enormous 
Growth  after  1808. — Introduction  of  the  Power  Loom 
in  1816. — Minimum  Duties  of  1816. — Growth  after 
the  Crisis  of  1818. — Conclusion  as  to  the  Effect  of 
Protection  ........  25-36 

IV. — The  Woollen  Manufacture. — First  Factories. — Growth 
between  1808  and  1815. — Duties  between  1816  and 
1828. — Condition  of  the  Industry  after  1816. — Con- 
clusion as  to  the  Effect  of  Protection  .  .  .  37-45 
V. — The  Iron  Manufacture. — Condition  in  the  Colonies, 
Unchanged  after  1789. — Use  of  Coke  and  Invention 
of  Puddling  in  England. — No  Change  in  the  United 
States. — Duties  of  1816  and  1818.— Discriminating 
Duty  on  Rolled  Bar-Iron. — Condition  of  the  Industry 
After  1816. — Conclusion  as  to  the  Effect  of  Pro- 
tection .........  46-59 

VI. — Concluding  Remarks. — Effect  of  the  Restrictive  Period 
— 1808-1815. — Arguments    Used  during  the  Period 
under   Consideration. — New  Turn  of  the  Protective 
Controversy  after  1840  and  Appearance  of  the  Wages 
Argument          ......  .  60-67 

vii 


Vlii  CONTENTS. 

CHAPTER  II. — The  Early  Protective  Movement  and  the 

Tariff  of  1828 68-108 

The  Early  Protective  Movement  set  in  after  the  Crisis  of 
1819. — Its  Stronghold  in  the  Agricultural  States. — New  Eng- 
land Hesitates. — The  South  in  Opposition. — Tariff  Act  of 
1824. — Minimum  Duties. — Condition  of  the  Woollen  Manu- 
facture.— Woollens  Bill  of  1827  and  the  Minimum  System  on 
Woollens. — Harrisburg  Convention  of  1827. — The  Political 
Situation  and  the  Attitude  of  the  Adams  and  Jackson  Parties 
to  the  Tariff. — Congressional  Session  of  1827-28. — Bill  Pro- 
posed by  the  Jackson  Men. — Duties  on  Raw  Materials. — 
Duties  on  Woollens. — Object  of  the  Bill. — Passage  in  the 
House. — Passage  in  the  Senate. — Repeal  of  the  Act  by  the 
Tariff  of  1832.— The  Minimum  Duties  Abolished.— Treat- 
ment of  the  Act  by  Protectionist  Writers. 

CHAPTER  III. — The  Tar  if— 1830-1860  .  .  109-154 
Tariff  Act  of  1832. — Compromise  Act  of  1833. — Act  of  1842. 
— Acts  of  1846  and  1857. — Crisis  of  1837. — Crisis  of  1857. — 
Revival  of  1843.— Crises  and  Tariffs.— The  Period  1846-60. 
— The  Duties  on  Iron. — Effect  on  Imports. — Rolled  Iron 
Duty. — Production  of  Iron  with  Anthracite. — Temporary 
Revival  of  Charcoal  Iron  after  1842,  and  Its  Ultimate  Dis- 
placement.— The  Cotton  Manufacture. — Its  Condition  in 
1833-40. — After  1842. — After  1846. — The  Woollen  Manu- 
facture.— Effect  of  Acts  of  1842  and  1846. — Carpets  and 
Hosiery. — Worsteds. — Effect  of  Free  Wool  after  1857. — 
Concluding  Remarks. 

PART   II. 

TARIFF  LEGISLATION — 1861-1909     ....  155-283 

CHAPTER  1.— The  War  Tariff 155 

The  Tariff  before  the  War. — The  Morrill  Tariff  of  1861. — 
Tax  and  Tariff  Act  of  1862. — Internal  Revenue  Act  of  1864. 
—Tariff  Act  of  1864.— Tariff  Act  of  1864  is  the  Basis  of  the 
Existing  Tariff. 
CHAPTER  II.—  The  Failure  to  Reduce  the  Tariff  after 

the  War       .         . 171 

Abolition  of  the  Internal  Taxes,  1866-72. — Failure  to  Reduce 


CONTENTS.  IX 

£be  Tariff.— Unsuccessful  Tariff  Bill  of  1867. — Act  of  1870.— 

Situation  in  1872.— Reform  Bill  in  the  House.— Ten  per  Cent. 
Reduction  Proposed.— Policy  of  Protectionists. — Act  of  1872. 
—Repeal  of  Tea  and  Coffee  Duties,  1872. — Ten  per  Cent. 
Reduction  Repealed. 

CHAPTER    III. — How  Duties  were  Raised  above  the 

War  Rates  ........     194 

Woollens  Act  of  1867. — The  Compensating  System. — Wool 
and  Woollens  Duties  of  1864. — Act  of  1867. — Duty  on  Wool ; 
on  Woollen  Cloths;  on  Flannels,  Carpets,  Dress  Goods. — 
Comment  on  the  ad-  Valorem  Duty. — Comment  on  the  Specific 
Duties. — The  Woollens  Act  a  Heavy  Protective  Measure  in 
Disguise. — Doubtful  Effect  on  the  Manufacture. — Copper  Act 
of  1869.— Steel  Rails,  1870.— Marble,  1864-1870.— Other 
Cases  Where  Duties  were  Increased. — Character  of  These 
Measures. 

CHAPTER  IV.— The  Tariff  Act  of  1883  .  .  .230 
Tariff  Commission  of  1882.— Act  of  1883 ;  How  Passed.— 
Duties  Raised  in  1883  :  Woollen  Dress  Goods,  Woollen  Cloths, 
Cottons,  Iron  Ore,  Steel ;  Other  Articles. — Duties  Reduced 
in  1883  :  Wool,  Woollens,  Cotton,  Iron,  Steel  Rails,  Copper, 
Other  Articles.— Duties  on  Wheat,  Corn,  Untouched,— 
General  Character  of  the  Act. 

CHAPTER  V. —  The  Tariff  Act  of  1890  .  .  .251 
Unsuccessful  Attempts  at  Legislation  in  1884-86. — President 
Cleveland's  Message  in  1889.— The  Mills'  Bill  and  the  Senate 
Bill  in  1888.— The  Election  of  1 888.— Passage  of  Tariff  Act 
of  1890. — Changes  in  the  Wool  Duties :  Clothing,  Combing, 
and  Carpet  Wools. — Changes  in  the  Duties  on  Woollens, 
Dress  Goods,  Cottons,  Other  Textiles.— Extension  of  the 
Minimum  System. — Iron,  Steel,  Rails,  Copper,  Tin  Plates,— 
The  Sugar  Duty  Repealed,  and  a  Bounty  Given — The  Re- 
ciprocity Provisions  and  their  Probable  Working. — Tho 
Question  of  Further  Extending  Protection  Squarely  Pre- 
sented: 


CONTENTS. 

CHAPTER  VI. —  The  Tariff  Act  of  1894  •  •  c  284 
Democratic  Victories  in  the  Elections  of  1890  and  1892. — Diffi- 
culties of  the  Democrats. — Passage  of  the  Act  of  1894. — Re- 
moval of  the  Wool  Duty. — Corresponding  Changes  on  Woollens. 
— Other  Textiles. — Duties  on  Coal  and  on  Iron  Ore  Reduced, 
not  Repealed. — Iron  and  Steel. — Ad-valorem  Duties  Favored 
by  House,  Specific  by  Senate. — The  Sugar  Question. — Reasons 
for  and  against  a  Duty  on  Raw  Sugar. — Such  a  Duty  Finally 
Imposed,  with  the  Income  Tax. — Duty  on  Refined  Sugar. — The 
Sugar  Trust. — Final  Outcome. — Disappointment  of  Tariff  Re- 
formers.— General  Character  of  the  Act. 

CHAPTER  VII.—  The  Tariff  Act  of  1897      .        .        .321 

Political  Overturn  of  1896. — Peculiar  Position  of  the  Republi- 
cans.— Need  of  Revenue. — Passage  of  the  Tariff  Act  at  the 
Extra  Session  of  1897. — Re-imposition  of  Wool  Duties. — 
Compound  Duties  Re-imposed  on  Woollens. — Cottons  Little 
Changed. — Specific  Duties  on  Silks  and  Linens — Iron  and  Steel 
Left  Unchanged,  except  Some  Special  Articles — New  Con- 
ditions in  the  Iron  Industry. — Steel  Rails  and  Tin  Plate. — 
Higher  Specific  Duties  on  Sugar,  with  Additional  Duty  on  Re- 
fined Sugar  Similar  to  that  of  1894. — Reciprocity  Provisions. 
— Uncertain  Financial  Yield. — General  Character  of  the  Act. 
Future  of  the  United  States  as  a  Manufacturing  Country. 

CHAPTER  VIII. — The  Tariff  Act  of  1909          .     361-408 

The  Act  of  1897  Undisturbed  for  Twelve  Years.— Causes  of 
its  Stability. — A  New  Doctrine  in  1909,  that  of  Equalizing 
Costs  of  Production. — Criticism  of  it. — The  Tariff  ^ill  of  1909 
before  the  House  Committee. — Reductions  and  Advances  Pro- 
posed.— Final  Passage  by  the  House. — The  Senate  Advances 
Duties. — Final  Settlement  in  Conference  Committee. — Duty 
on  Hides  Repealed. — Coal,  Iron  Ore,  Lumber  at  Reduced 
Rates. — Iron  and  Steel. — Steel  Rails. — Leather  and  Shoes. — 
Advances  in  Duty  :  Cottons,  Silks,  Hosiery. — High  Cost  of 
Labor  in  these  Cases. — Wool  and  Woollens,  and  Sugar,  Vir- 
tually Unchanged. — Sugar  from  Philippines  AdmittedTree.— 


CONTENTS.  XI 

New  Position  of  the  Sugar  Duty. — Some  "Jokers." — Maxi- 
mum and  Minimum  Provisions. — The  Tariff  Board. — Con. 
elusion  :  No  Downward  Revision  of  Serious  Consequence. 

CHAPTER  IX. —  The  Tariff  Act  of  1913    .  .      409-449 

Defeat  of  the  Republicans  in  the  Congressional  Election  of 
1910. — Various  Bills  Proposed  in  1911-13,  but  No  Legislation. 
— Presidential  Election  of  1912;  the  Democrats  in  Full  Control 
of  Congress  in  1913. — Their  Leadership  Good;  No  Jokers. — 
The  Principle  of  a  "Competitive  Tariff"  as  a  Guide  to  Legisla- 
tion; that  of  Preserving  "  Legitimate  Industries." — The  Tariff 
Board  and  ''  Scientific  Rates." — Duty  on  Sugar  Lowered  at 
once;  to  be  Abolished  in  1916. — Wool  Admitted  Free;  Reduced 
ad-Valorem  Duties  on  Woollens. — Reductions  on  Cottons;  ad- 
Valorem  Duties  Throughout. — Comparatively  High  Rates  Re- 
tained on  Silks. — Earthenware  and  Pottery. — Crude  Iron  Free; 
Agricultural  Implements  Free. — Revision  and  Strengthening  of 
Administrative  Sections. — General  Character  of  the  Act. 

APPENDIX — TABLES 451-459 

I. — Imports  and  Duties,  1860-1907. 
II. — Duties  of  1861,  and  those  of  1864  which  were  retained, 

without  change,  till  1883. 
III. — Revenue  from  internal  taxes  and  from  the  tariff,   1860- 

1907. 
IV. — Product,  Imports,  and  Foreign  and  Domestic  Prices  of 

Copper,  1875-1886. 

V. — Product,  Imports,  and  Foreign  and  Domestic  Prices  of 
Steel  Rails,  1871-1908. 

INDEX 461- 


THE  TARIFF  HISTORY  OF  THE 
UNITED  STATES. 


PART  jl 
CHAPTER  I 

PROTECTION  TO  YOUNG  INDUSTRIES  AS 
APPLIED  IN  THE  UNITED  STATES. 

I. 

THE  ARGUMENT  FOR  PROTECTION  TO  YOUNG 
INDUSTRIES. 

OF  the  arguments  in  favor  of  protection,  none  has 
been  more  frequently  or  more  sincerely  urged  than  that 
which  is  expressed  in  the  phrase  "  protection  to  young 
industries."  None  has  received  so  generally  the  approval 
of  economists,  even  of  those  little  disposed  to  acknowl- 
edge the  validity  of  any  reasoning  not  in  accordance  with 
the  theory  of  free  exchange.  Mill  gave  it  the  weight  of 
his  approval  in  a  passage  which  has  been  frequently  cited. 
Later  English  writers  have  followed  him  in  granting  its 
intrinsic  soundness.  The  reasoning  of  List,  the  most 
prominent  protectionist  writer  among  the  Germans,  is 
based,  so  far  as  it  is  purely  economic,  on  this  argument, 
and  since  List's  time  the  argument  has  taken  an  estab- 
lished place  in  German  treatises  on  political  economy, 
even  though  it  be  admitted  that  the  conditions  to  which 
it  fairly  applies  belong  to  the  past. 


2  PROTECTION  TO  YOUNG  INDUSTRIES. 

The  argument  is,  in  brief,  that  it  may  be  advantageous 
to  encourage  by  legislation  a  branch  of  industry  which 
might  be  profitably  carried  on,  which  is  therefore  sure  to 
be  carried  on  eventually,  but  whose  rise  is  prevented  for 
the  time  being  by  artificial  or  accidental  causes.  The 
essential  point  of  the  argument  lies  in  the  assumption 
that  the  causes  which  prevent  the  rise  of  the  industry, 
and  render  protection  necessary,  are  not  natural  and 
permanent  causes, — not  such  as  would  permanently  pre- 
vent, under  a  state  of  freedom,  the  growth  of  the  industry. 
Let  it  be  supposed,  for  instance,  that  the  industry  to  be 
encouraged  is  the  cotton  manufacture.  The  natural  ad- 
vantages of  a  given  country  for  making  cotton  cloths  are 
good,  we  may  suppose,  in  comparison  with  the  advantages 
for  producing  other  things.  The  raw  material  is  cheap, 
power  for  machinery  is  abundant,  the  general  intelligence 
and  industry  of  the  people — which,  since  they  admit  of 
but  very  slow  change,  must  be  considered  natural  advan- 
tages— are  such  as  to  fit  them  for  complex  industrial 
operations.  There  is  no  permanent  cause  why  cotton 
goods  should  not  be  obtained  at  as  low  cost  by  making 
them  at  home  as  by  importing  them  ;  perhaps  they  can 
even  be  produced  at  lower  cost  at  home.  But  the  cotton 
manufacture,  let  it  be  further  supposed,  is  new ;  the 
machinery  used  is  unknown  and  complicated,  and  re- 
quires skill  and  experience  of  a  kind  not  attainable  in 
other  branches  of  production.  The  industry  of  the 
country  runs  by  custom  in  other  grooves,  from  which  it 


THE  ARGUMENT  FOR  PROTECTION.  3 

is  not  easily  diverted.  If,  at  the  same  time,  the  com- 
munication of  knowledge  be  slow,  and  enterprise  be 
hesitating,  we  have  a  set  of  conditions  under  which  the 
establishment  of  the  cotton  manufacture  may  be  pre- 
vented, long  after  it  might  have  been  carried  on  with 
advantage.  Under  such  circumstances  it  may  be  wise  to 
encourage  the  manufacture  by  duties  on  imported  goods, 
or  by  other  analogous  measures.  Sooner  or  later  the 
cotton  manufacture  will  be  introduced  and  carried  on, 
even  without  assistance  ;  and  the  government's  aid  will 
only  cause  it  to  be  established  with  less  friction,  and  at 
an  earlier  date,  than  would  otherwise  have  been  the  case. 
It  may  illustrate  more  clearly  the  conditions  under 
which  such  assistance  may  be  useful,  to  point  out  those 
under  which  it  is  superfluous.  The  mere  fact  that  an 
industry  is  young  in  years — has  been  undertaken  only 
within  a  short  period  of  time — does  not  supply  the  con- 
ditions  under  which  protection  is  justified  by  this  argu- 
ment. An  industry  recently  established,  but  similar  in 
kind  to  other  branches  of  production  already  carried  on 
in  the  country,  would  hardly  come  within  its  scope.  But 
where  the  industry  is  not  only  new,  but  forms  a  departure 
from  the  usual  track  of  production ;  where,  perhaps,  ma- 
chinery of  an  entirely  strange  character,  or  processes 
hitherto  unknown,  are  necessary  ;  where  the  skill  and  ex- 
perience required  are  such  as  could  not  be  attained  in  the 
occupations  already  in  vogue  ;  under  these  circumstances 
protection  may  be  applied  with  good  results,  if  no  natural 


4  PROTECTION  TO  YOUNG  INDUSTRIES. 

disadvantages,  in  addition  to  the  artificial  obstacles,  stand 
in  the  way.  The  manufacture  of  linen  goods  in  the 
United  States,  at  the  present  time,  probably  supplies  an 
example  of  an  industry  which,  though  comparatively  new, 
can  hardly  be  said  to  deserve  protection  as  a  young  in- 
dustry. The  methods  and  machinery  in  use  are  not 
essentially  different  from  those  of  other  branches  of  tex- 
tile manufactures.  No  great  departure  from  the  usual 
track  of  production  is  necessary  in  order  to  make  linens. 
Manufactures  of  the  same  general  character  are  estab- 
lished on  all  sides.  Work-people  and  managers  with 
experience  in  similar  work  can  be  easily  found.  Moreover, 
the  means  of  obtaining  and  communicating  knowledge 
at  the  present  time  are  such  that  information  in  regard  to 
the  methods  and  machinery  of  other  countries  can  be 
easily  obtained,  while  workmen  can  be  brought  from 
abroad  without  difficulty.  Those  artificial  obstacles  which 
might  temporarily  prevent  the  rise  of  the  industry  do 
not  exist,  and  it  may  be  inferred  that,  if  there  are  no 
permanent  causes  which  prevent  linens  from  being  made 
as  cheaply  in  the  United  States  as  in  other  countries,  the 
manufacture  will  be  undertaken  and  carried  on  without 
needing  any  stimulus  from  protecting  duties. 

There  are  two  sets  of  conditions  under  which  it  is  sup- 
posable  that  advantages  not  natural  or  inherent  may  be 
found  in  one  country  as  compared  with  another,  under 
which  causes  merely  temporary  and  accidental  may  pre- 
vent the  rise  of  certain  branches  of  industry  in  the  second 


THE  ARGUMENT  FOR  PROTECTION.  5 

country,  and  under  which,  therefore,  there  may  be  room 
for  the  application  of  protection.  These  are,  first,  the 
state  of  things  in  a  new  country  which  is  rapidly  growing 
in  population,  and  in  which,  as  population  becomes  more 
dense,  there  is  a  natural  change  from  exclusive  devotion 
to  the  extractive  industries  toward  greater  attention  to 
those  branches  of  production  classed  as  manufactures. 
The  transition  from  a  purely  agricultural  state  to  a  more 
diversified  system  of  industry  may  be  retarded,  in  the 
complete  absence  of  other  occupations  than  agriculture, 
beyond  the  time  when  it  might  advantageously  take 
place.  Secondly,  when  great  improvements  take  place  in 
some  of  the  arts  of  production,  it  is  possible  that  the  new 
process  may  be  retained  in  the  country  in  which  they 
originate,  and  may  fail  to  be  applied  in  another  country, 
through  ignorance,  the  inertia  of  habit,  and  perhaps  in 
consequence  of  restrictive  legislation  at  the  seat  of  the 
new  methods.  Here,  again,  the  obstacles  to  the  intro- 
duction of  the  new  industry  may  be  of  that  artificial  kind 
which  can  be  overcome  most  easily  by  artificial  means. 
Now,  both  these  sets  of  conditions  seem  to  have  been  ful- 
filled in  the  United  States  in  the  beginning  of  the  igth 
century.  The  country  was  normally  emerging,  to  a  con- 
siderable extent,  from  that  state  of  almost  exclusive  devo- 
tion to  agriculture  which  had  characterized  the  colonies. 
At  the  same  time  great  changes  were  taking  place  in 
the  mechanical  arts,  and  new  processes,  hardly  known 
outside  of  England,  and  held  under  a  practical  monopoly 


6  PROTECTION   TO  YOUNG  INDUSTRIES. 

there,  were  revolutionizing  the  methods  of  manufacturing 
production.  Under  these  circumstances  there  would 
seem  to  have  existed  room  for  the  legitimate  application 
of  protection  for  young  industries. 

The  more  detailed  examination  in  the  following  pages 
of  the  industrial  condition  of  the  country  during  the  ear- 
lier part  of  the  i  Qth  century  will  bring  out  more  clearly  the 
reasons  why  protection  may  then  have  been  useful.  It  may 
be  well,  however,  to  notice  at  this  point  one  difference 
between  those  days  and  the  present  which  must  seriously 
affect  the  application  of  the  argument  we  are  considering. 
Even  if  we  were  to  suppose  the  conditions  of  1810  to 
exist  now ;  if  the  country  were  now  first  beginning  to 
attempt  manufactures,  and  if  a  great  revolution  in  manu- 
facturing industry  happened  to  make  the  attempt  pecu- 
liarly difficult ;  even  then  the  obstacles  arising  from  the 
force  of  custom,  and  from  the  want  of  familiarity  with 
new  processes,  would  be  much  more  easy  to  overcome 
now  than  sixty  years  ago.  The  ties  of  custom  in  industry 
have  become  much  loosened  in  the  last  half  century;  cap- 
ital and  labor  turn  more  easily  to  new  employments.  The 
railroad,  the  telegraph,  the  printing-press,  the  immense 
increase  in  the  facility  of  communication,  the  constant 
change  in  methods  of  production  in  all  industries,  have 
tended  to  make  new  discoveries  and  inventions  common 
property,  and  to  do  away  with  advantages  in  production 
based  on  other  than  permanent  causes.  It  is  true  that 
there  are  still  appreciable  differences  in  the  arts  of 


THE  ARGUMENT  FOR  PROTECTION.  J 

duction  in  different  countries,  and  that  some  may  have  a 
superiority  over  others  based  on  the  merely  accidental  or 
temporary  possession  of  better  processes  or  more  effective 
machinery.  But  the  United  States  hardly  lag  behind  in 
the  industrial  advance  of  the  present  day,  and  where  they 
do  labor  under  artificial  or  factitious  disadvantages,  these 
cannot  endure  long  or  be  of  great  consequence  under  a 
system  of  freedom. 

Eighty  years  ago,  however,  the  state  of  things  was 
very  different.  The  conditions  were  then  in  force  under 
which  protection  might  be  needed  to  enable  useful  indus- 
tries to  be  carried  on.  The  argument  for  protection  to 
young  industries  was  accordingly  the  most  effective  of 
those  urged  in  favor  of  the  protective  policy.  During 
the  twenty  years  which  followed  the  war  of  1812  the  pro- 
tective controversy  was  one  of  the  most  important  fea- 
tures in  the  political  life  of  the  nation ;  and  the  young 
industries  argument  was  the  great  rallying-cry  of  the  pro- 
tectionists. It  is  of  interest  to  examine  how  far  protec- 
tion of  the  kind  advocated  was  actually  applied,  and  how 
far  it  was  the  cause,  or  an  essential  condition,  of  that  rise 
of  manufactures  which  took  place.  The  object  of  this 
paper  is  to  make  such  an  investigation. 


II. 


THE  INDUSTRIAL   HISTORY  OF  THE  UNITED  STATES,  AND 
THE  COURSE  OF  PROTECTIVE  LEGISLA- 
TION,  FROM    1789  TO    1838. 

THE  early  economic  history  of  the  United  States  may 
be  divided  into  two  periods.  The  first,  which  is  in  the 
main  a  continuation  of  the  colonial  period,  lasted  till  about 
the  year  1808  ;  the  embargo  marks  the  beginning  of  the 
series  of  events  which  closed  it.  The  second  began  in 
1808,  and  lasted  through  the  generation  following.  It 
was  during  the  second  period  that  the  most  decided  at- 
tempt was  made  to  apply  protection  to  young  industries 
in  the  United  States,  and  with  this  period  we  are  chiefly 
concerned. 

During  the  first  period  the  country  was,  on  the  whole, 
in  the  same  industrial  condition  in  which  the  colonies  had 
been.  The  colonies  had  been  necessarily  engaged  almost 
exclusively  in  agriculture,  and  in  the  occupations  closely 
connected  with  it.  The  agricultural  community  could 
not  get  on  without  blacksmiths,  carpenters,  masons,  shoe- 
makers, and  other  artisans,  and  these  existed  side  by  side 
with  the  farmers.  In  those  days,  it  must  be  remembered, 

8 


INDUSTRIAL  HISTORY  OF  THE  UNITED   STATES*     9 

handicraft  workmen  of  this  kind  occupied  a  more  import- 
ant place  in  industrial  organizations  than  they  do  at  the 
present  time.  They  made  many  articles  and  performed 
many  services  which  are  now  the  bbjects  of  manufacturing 
production  and  of  extensive  trade,  and  come  within  the 
range  of  international  dealings.  Many  tools  were  then 
made  by  individual  blacksmiths,  many  wares  by  the  car- 
penter, many  homespun  cloths  fulled  and  finished  at  the 
small  fulling-mill.  Production  of  this  kind  necessarily 
takes  place  at  the  locality  where  consumption  goes  on. 
In  those  days  the  division  of  labor  between  distant  bodies 
of  men  had  been  carried  out  to  a  comparatively  slight 
extent,  and  the  scope  of  international  trade  was  therefore 
much  more  limited.  The  existence  of  these  handicraft 
workmen  accounts  for  the  numerous  notices  of  "  manu- 
factures "  which  Mr.  Bishop  industriously  collected  in  his 
"  History  of  Manufactures,"  and  is  not  inconsistent  with 
the  mainly  extractive  character  of  the  industry  of  the 
colonies.  What  could  be  imported  at  that  time  was  im- 
ported, and  was  paid  for  by  the  exportation  of  agricul- 
tural produce.  The  exportation  took  place,  so  far  as  the 
northern  colonies  were  concerned,  largely  to  the  West 
Indies.  From  the  West  India  trade  the  means  for  pay- 
ing indirectly  for  the  imported  goods  were  mainly  ob- 
tained. There  were  some  important  exceptions  to  this 
general  state  of  things.  Ship-building  was  carried  on  to  a 
considerable  extent  in  New  England,  where  abundance  of 
material  and  the  necessity  of  transportation  by  water 


10  PROTECTION  TO   YOUNG  INDUSTRIES. 

made  such  an  industry  natural.  The  production  of  un- 
manufactured iron  was  carried  on  to  a  considerable  extent ; 
for  at  that  time  the  production  of  pig  and  bar  iron  tended 
to  fix  itself  in  those  countries  where  wood,  the  fuel  then 
used,  was  abundant,  and  was  therefore  an  industry  much 
more  analogous  to  agriculture  than  it  has  been  since  the 
employment  of  coal  as  fuel.  In  the  main,  however,  the 
colonies  made  only  such  manufactures  as  could  not  be  im- 
ported. All  manufactured  goods  that  could  be  imported 
\were  not  made  at  home,  but  obtained  in  exchange  for 
^agricultural  exports. 

This  state  of  things  was  little  changed  after  the  end  of 
the  Revolutionary  war  and  the  adoption  of  the  Constitu- 
tion. The  year  1789  marks  no  such  epoch  in  economic  as  it 
does  in  political  history.  Agriculture,  commerce,  and  the 
necessary  mechanic  arts,  continued  to  form  the  main  occu- 
pations of  the  people.  Such  goods  as  could  be  imported 
continued  to  be  obtained  from  abroad  in  exchange  for 
exports,  mainly  of  agricultural  produce.  The  range  of 
importable  articles  was,  it  is  true,  gradually  extending. 
Cloths,  linens,  and  textile  fabrics  were  still  chiefly  home- 
spun, and  fine  goods  of  this  kind  were  still  in  the  main 
the  only  textile  fabrics  imported.  But  with  the  great 
growth  of  manufacturing  industry  in  England  during  this 
time,  the  range  of  articles  that  could  be  imported  was 
growing  wider  and  wider.  During  the  Napoleonic  wars  the 
American  market  was  much  the  most  important  for  the 
newly  established  English  manufactures.  Large  quanti- 


INDUSTRIAL  HISTORY  OF  THE  UNITED   STATES.    II 

ties  of  cotton  and  woollen  goods  were  imported,  and  the 
importations  of  manufactures  of  iron,  in  regard  to  which 
a  similar  change  in  production  was  then  taking  place, 
also  increased  steadily.  Sooner  or'laterthe  change  in  the 
course  of  production  which  was  going  on  in  England  must 
have  had,  and  did  have,  a  strong  influence  on  the  eco- 
nomic condition  of  the  United  States ;  but  for  the  time 
being  this  influence  was  little  felt,  and  the  country  con- 
tinued in  the  main  to  run  in  the  grooves  of  the  colonial 
period. 

This  absence  of  development  was  strongly  promoted  by 
the  peculiar  condition  of  the  foreign  trade  of  the  country 
up  to  1808.  The  wars  of  the  French  Revolution  opened 
to  this  country  profitable  markets  for  its  agricultural 
products  in  the  West  Indies  and  in  Europe,  and  profit- 
able employment  for  its  shipping,  both  in  carrying  the 
increased  exports  and  in  a  more  or  less  authorized  trade 
between  the  belligerent  countries  and  their  colonies.  For 
many  years  the  gains  arising  from  these  sources,  though 
not  regular  or  undisturbed,  were  great,  and  afforded  every 
inducement  to  remain  in  the  occupations  that  yielded 
them.  The  demand  for  agricultural  products  for  exporta- 
tion to  the  belligerent  countries  and  their  colonies  was 
large,  and  the  prices  of  wheat,  corn,  and  meat  were  corre- 
spondingly high.  The  heavy  exports  and  the  profits  on 
freights  furnished  abundant  means  for  paying  for  im- 
ported goods.  Importations  were  therefore  large,  and 
imported  goods  were  so  cheap  as  to  afford  little  induce- 


12 


PROTECTION   TO    YOUNG  INDUSTRIES. 


ment  for  engaging  in  the  production  of  similar  goods  at 
home.1 

The  tariff  legislation  of  this  period  was  naturally  much 
influenced  by  the  direction  taken  by  the  industries  of  the 

1  The  following  tables  of  imports  and  exports  show  the  influence 
of  these  circumstances  on  the  foreign  trade  of  the  country.  The  exports 
of  foreign  produce  show  the  swelling  of  the  carrying-trade.  The  price  of 
flour  shows  the  effect  on  the  prices  of  agricultural  produce.  The  influ- 
ence of  the  temporary  stoppage  of  the  war  in  Europe  during  the  time  of 
the  Peace  of  Amiens  is  clearly  seen. 


Year. 

Gross  Imports. 
ooo  Omitted. 

Gross  Exports. 
ooo  Omitted. 

Exports  of  For- 
eign Produce. 

Price  of 
Flour 
per  Bbl. 

ooo  Omitted. 

1791 

29,200 

19,000 

500 

... 

92 

31,500 

20,700 

1,750 

$  5.07 

93 

31,100 

26,100 

2,100 

6.21 

94 

34,600 

33,ooo 

6,500 

7.22 

95 

69,750 

48,000 

8,500 

12.05 

96 

81,400 

67,000 

26,300 

12.43 

97 

75,400 

56,800 

27,000 

9.00 

98 

68,500 

61,500 

33,000 

8.78 

99 

79,000 

78,600 

45,500 

9.62 

1800 

91,200 

71,000 

39>100 

9.85 

OI 

111,300 

94,000 

46,600 

10.45 

Peace  of  j  02 

76,300 

72,000 

35,7oo 

6.75  j. 

Amiens.    (  03 

64,700 

55,8oo 

13,600 

6.73  [ 

04 

85,000 

77,700 

36,200 

8.22 

05 

120,600 

95,500 

53,200 

10.28 

06 

129,400 

101,500 

60,300 

730 

07 

138,500 

108,300 

59,600 

7.00 

08 

57,000 

22,400 

13,000 

5.60 

09 

10 

59,400 

85,400 

52,200 
66,700 

20.800 
24,400 

6.90 
9.66 

ii 

53,400 

61,300 

16,000 

10.00 

12 

77,000 

38,500 

8,500 

8.75 

13 

22,000 

27,900 

2,800 

8.50 

14 

13,000 

6,900 

150 

7.70 

The  tables  of  imports  and  exports  are  from  the  Treasury  Reports.  The 
last  table,  giving  the  price  of  flour,  is  in  "  American  State  Papers,  Finance." 
III.,  536. 


INDUSTRIAL  HISTORY  OF  THE  UNITED  STATES.    13 

country.  The  peculiarly  favorable  conditions  under  which 
agriculture  and  commerce  were  carried  on  prevented  the 
growth  of  any  strong  feeling  in  favor  of  assisting  manufac- 
tures. Much  has  been  said  in  the  'course  of  the  protective 
controversy  about  the  views  of  the  fathers  of  the  repub. 
lie.  But  for  nearly  twenty  years  after  the  formation  of  the 
Union  other  subjects  so  absorbed  the  attention  of  public 
men  that  no  distinct  opinion  appears  in  their  utterances 
for  or  against  protective  duties.  Considering  the  state  of 
economic  knowledge  in  those  days,  the  example  set  by 
European  countries,  and  the  application  of  the  colonial 
system  before  the  days  of  independence,  we  cannot  be 
surprised  that  some  disposition  was  shown  to  impose  pro- 
tective duties.  It  is  curious  that  in  the  first  session  of 
Congress  these  were  advocated  most  earnestly  by  the 
representatives  from  Pennsylvania,  who  took  their  stand 
from  the  first  as  unflinching  advocates  of  a  protective 
policy.  On  the  other  hand,  the  current  toward  more  lib- 
eral views,  which  had  set  in  so  strongly  after  the  writings 
of  the  French  economists  and  the  publication  of  the 
"  Wealth  of  Nations,"  had  made  its  way  to  the  United 
States.  One  might  expect  to  find  its  influence  most 
strong  among  the  followers  of  Jefferson,  whose  political 
philosophy  led  them  in  general  to  oppose  government 
interference.  But  both  Federalists  and  Republicans  were 
influenced  in  their  attitude  to  the  question  of  protection 
most  of  all  by  its  bearing  on  the  other  more  prominent 
questions  on  which  parties  began  to  be  divided. 


14  PROTECTION  TO  YOUNG  INDUSTRIES. 

Madison  had  maintained  the  principle  of  free  intercourse 
in  1789,'  and  Jefferson  in  1787  had  extolled  the  virtues  of 
a  simple  agricultural  State.8  But  in  1793,  when  the  Fed- 
eralists and  Republicans  began  to  differ  on  questions  of 
foreign  policy,  and  especially  on  the  attitude  the  country 
should  take  in  the  wars  of  the  French  Revolution,  Jef- 
ferson advocated  vigorous  measures  of  protection  directed 
against  England,  and  Madison  brought  forward  a  set  of 
resolutions  based  on  his  recommendations.3  On  the  other 
hand,  Fisher  Ames  had  said,  in  1789,  that  the  general  gov- 
ernment should  nurture  those  industries  in  which  the 
individual  States  had  an  interest ;  but  in  1794,  when  hia 
political  views  led  him  to  oppose  Madison's  resolutions, 
he  called  the  whole  theory  of  protection  an  exploded 
dogma.4 

The  first  tariff  act,  that  of  1789,  was  protective  in  in- 
i  tention  and  spirit.  The  Congress  of  the  Confederation 
had  framed  a  plan  for  a  general  five  per  cent,  duty,  with 
a  few  specific  duties  on  articles  like  tea,  coffee,  and  sugar, 
— a  plan  whose  failure  was  one  of  the  most  important 
events  leading  to  the  adoption  of  the  Constitution.  When 
Congress  met  in  1789,  this  scheme,  which  had  aimed 
solely  at  procuring  the  needed  revenues,  was  presented 

1  "Annals  of  Congress,"  1789,  pp.  112-114. 

1  "  Notes  on  Virginia,  Works,"  VIII.,  404. 

8  See  Jefferson's  "  Report  on  Commerce,  Works,"  VII.,  637  ;  and  Madi 
son's  resolutions  of  1794,  based  on  Jefferson's  Report,  "  Annals  of  Con- 
gress," 1794,  pp.  155,  209. 

4  "Annals  of  Congress,"  1789,  p.  221  ;  1794,  p.  342. 


INDUSTRIAL  HISTORY  OF  THE  UNITED   STATES.     15 

anew  by  Madison,  who  advocated  it  not  only  on  financial 
grounds  but  on  the  general  principles  of  free  trade.  But 
several  of  the  States,  especially  Massachusetts  and  Penn- 
sylvania, had  imposed  protective  duties  before  1789;  and 
they  were  desirous  of  maintaining  the  aid  then  given  to 
some  of  their  industries.  Moreover,  the  feeling  of  resent- 
ment against  Great  Britain  was  strong.  Consequently, 
Madison's  simple  proposal  was  replaced  by  a  more  compli, 
cated  scheme.  The  general  duty  of  five  per  cent,  was  re- 
tained on  all  goods  not  otherwise  enumerated.  On  certain 
articles  of  luxury,  higher  ad  valorem  rates  were  fixed, 
the  highest,  on  carriages,  being  fifteen  per  cent.  Specific 
duties  were  imposed  on  some  selected  articles,  such  as 
hemp,  cordage,  nails,  manufactures  of  iron,  and  glass. 
These  articles  were  selected,  and  made  subject  to  the 
specific  duties,  with  the  clear  intent  of  stimulating  do- 
mestic production.  The  general  range  of  duties  was 
by  no  means  such  as  would  have  been  thought  protec- 
tive in  later  days ;  but  the  intention  to  protect  was 
there.1 

The  legislation  of   the  next   twenty  years,  however,! 
brought  no  further  appreciable  development  of  the  pro- 1 
tective  policy.     For  a  short  time  after  1789,  it  may  be 
possible  to  detect  a  drift  in  favor  of  protective  duties, 

1  On  the  act  of  1789,  see  the  monograph  by  William  Hill,  •'  The  First 
Stages  of  the  Tariff  Policy  of  the  United  States,"  in  Publications  of  the 
American  Economic  Association,  vol.  VIII.,  No.  6.  This  valuable  paper 
has  led  to  a  modification  of  the  account  of  the  act  of  1789  given  in  previ- 
ous editions  of  the  present  book 


1 6  PROTECTION  TO   YOUNG  INDUSTRIES. 

which  doubtless  was  strengthened  by  the  powerful  ad- 
vocacy of  protection  in  Hamilton's  "  Report  on  Manu- 
factures "  (1792).  But  that  famous  document  had  little, 
j/|if  any,  effect  on  legislation.  The  moderate  policy  of 
1789  was  maintained.  The  duties  were  increased  from 
time  to  time  as  more  revenue  was  needed,  but  they  were 
in  all  cases  moderate.  Those  which  were  most  distinctly 
protective  had  no  appreciable  influence  in  diverting  the 
industry  of  the  country  into  new  channels.  No  action 
at  all  was  taken  for  the  encouragement  of  the  produc- 
tion of  textiles,  of  crude  iron,  and  of  the  other  articles 
which  later  became  the  great  subjects  of  dispute  in  the 
protective  controversy. 

V  The  industrial  situation  changed  abruptly  in  1808. 
The  complications  with  England  and  France  led  to  a 
series  of  measures  which  mark  a  turning-point  in  the 
industrial  history  of  the  country.  The  Berlin  and  Milan 
decrees  of  Napoleon,  and  the  English  orders  in  Council, 
led,  in  December,  1807,  to  the  Embargo.  The  Non- 
Intercourse  Act  followed  in  1809.  War  with  England 
was  declared  in  1812.  During  the  war,  intercourse  with 
England  was  prohibited,  and  all  import  duties  were 
doubled.  The  last-mentioned  measure  was  adopted  in 
the  hope  of  increasing  the  revenue,  but  had  little  effect, 
for  foreign  trade  practically  ceased  to  exist.  This  series 
of  restrictive  measures  blocked  the  accustomed  channels 
of  exchange  and  production,  and  gave  an  enormous 
stimulus  to  those  branches  of  industry  whose  products 


INDUSTRIAL  HISTORY  OF  THE  UNITED   STATES.     1 7 

had  before  been  imported.  Establishments  for  the 
manufacture  of  cotton  goods,  woollen  cloths,  iron,  glass, 
pottery,  and  other  articles,  sprang  up  with  a  mushroom 
growth.  We  shall  have  occasio'rr  to  refer  more  in  detail 
to  this  growth  when  the  history  of  some  of  these  manu- 
,  factures  comes  to  be  considered  separately.  It  is  sufficient 
here  to  note  that  the  restrictive  legislation  of  1808-15 
was,  for  the  time  being,  equivalent  to  extreme  protection./ 
The  consequent  rise  of  a  considerable  class  of  manufac- 
turers, whose  success  depended  largely  on  the  continuance 
of  protection,  formed  the  basis  of  a  strong  movement  for 
more  decided  limitation  of  foreign  competition. 

Some  signs  of  the  gradual  growth  of  a  protective  feeling 
appear  before  the  close  of  the  war.1  It  was  natural  that 
the  patriotic  fervor  which  the  events  of  the  period  of  re- 
striction and  war  called  out  for  the  first  time  in  our  his- 
tory, should  bring  with  it  a  disposition  to  encourage  the 
production  at  home  of  a  number  of  manufactured  articles, 
of  which  the  sudden  interruption  in  the  foreign  supply 
caused  great  inconvenience.  Madison,  whose  views  on 
this  subject,' as  on  others,  shifted  as  time  went  on  and 
circumstances  changed,  recommended  the  encouragement 
of  manufactures  ;  and  in  some  of  Clay's  earlier  speeches 
we  can  see  the  first  signs  of  the  American  system  of  the 

1  It  is  curious  to  note  that  in  1802-1804,  during  the  temporary  lull  that 
followed  the  Peace  of  Amiens,  the  committee  reports  seem  to  show  a  drift 
toward  protection.  See  "  American  State  Papers,  Finance,"  II.,  pp.  29,  80, 
and  the  report  on  the  Barbary  Powers  Act  of  1804,  "  Annals  of  Congress," 
1804,  pp.  946-950. 


PROTECTION  TO  YOUNG  INDUSTRIES. 

future.1  The  feeling  in  favor  of  the  manufactures  that  had 
sprung  up  during  the  time  of  restriction  obtained  some 
clear  concessions  in  the  tariff  act  of  1816.  The  control 
of  the  policy  of  Congress  at  that  time  was  in  the  hands 
of  a  knot  of  young  men  of  the  rising  generation,  who  had 
^brought  about  the  war  and  felt  in  a  measure  responsible 
for  its  results.  There  was  a  strong  feeling  among  these 
that  the  manufacturing  establishments  which  had  grown 
up  during  the  war  should  be  assisted.  There  was  little 
feeling,  however,  either  in  Congress  or  among  the  people, 
such  as  appeared  in  later  years,  in  favor  of  a  permanent 
strong  protective  policy.  Higher  duties  were  therefore 
granted  on  those  goods  in  whose  production  most  interest 
was  felt,  textile  fabrics  ;  but  only  for  a  limited  period. 
Cotton  and  woollen  goods  were  to  pay  25  per  cent,  till 
1819  ;  after  that  date  they  were  to  pay  20  per  cent.  A 
proviso,  intended  to  make  more  secure  this  measure  of 
protection,  was  adopted  in  regard  to  a  minimum  duty  on 
cotton  goods,  to  which  reference  will  be  made  in  another 
connection.  These  and  some  other  distinctly  protective 
provisions  were  defended  by  Calhoun,  mainly  on  the 
ground  of  the  need  of  making  provision  for  the  exigencies 
of  another  war ;  and  on  that  ground  they  were  adopted, 
and  at  the  same  time  limited.  The  general  increase  of 

1  See  Madison's  message  of  1809,  "Statesman's  Manual,"  I.,  289;  and 
Clay's  speech  of  1810,  "Works,"  I.,  195.  Madison  never  gave  up  his 
general  acceptance  of  the  principle  of  free  trade,  but  admitted  it  to  be 
inapplicable  to  articles  needed  in  time  of  war,  and  in  circumstances  to 
which  the  young-industries'  a/gument  applied.  See  his  "  Works,"  III..  42. 


INDUSTRIAL  HISTORY  OF  THE  UNITED  STATES.    !$ 

duties  under  the  act  of  1816,  to  an  average  of  about 
twenty  per  cent.,  was  due  to  the  necessity  of  providing 
for  the  payment  of  the  interest  on  the  heavy  debt  con- 
tracted during  the  war. 

For  some  time  after  the  close  of  the  war  and  the 
enactment  of  the  tariff  of  1816,  there  was  no  pressure  foi 
a  more  vigorous  application  of  protective  principles.  The 
general  expectation  was,  that  the  country  would  fall  back 
into  much  the  same  state  of  things  as  that  which  had  ex- 
isted before  1808  ;  that  agriculture  and  commerce  would 
again  be  as  profitable  as  during  the  previous  period,  and 
would  be  as  exclusively  the  occupations  of  the  people. 
Such  an  expectation  could  riot  in  the  nature  of  things  be 
entirely  fulfilled,  but  for  a  time  it  was  encouraged  by 
several  accidental  circumstances.  The  harvests  in  Europe 
for  several  seasons  were  bad,  and  caused  a  stronger  de- 
mand and  higher  price  for  the  staple  food  products.  The 
demand  for  cotton  was  large,  and  the  price  high.  Most 
important  of  all,  the  currency  was  in  a  state  of  complete 
disarrangement,  and  concealed  and  supported  an  unsound 
economic  condition.  Under  cover  of  the  excessive  issues 
of  practically  irredeemable  bank-notes,  the  prices  of  all 
commodities  were  high,  as  were  the  general  rates  of  wages 
and  rents.  The  prices  of  bread-stuffs  and  provisions,  the 
staples  of  the  North,  and  of  cotton  and  tobacco,  the 
staples  of  the  South,  were  high,  not  only  absolutely,  but 
relatively,  and  encouraged  continued  large  production 
of  these  articles.  The  prices  of  most  manufactured 


PROTECTION  TO  YOUNG  INDUSTRIES. 

goods  were  comparatively  low.  After  the  war  the  im- 
ports of  these  from  England  were  very  heavy.  The  long 
pent-up  stream  of  English  merchandise  may  be  said  to 
have  flooded  the  world  at  the  close  of  the  Napoleonic  wars. 
In  this  country,  as  in  others,  imports  were  carried  beyond 
the  capacity  for  consumption,  and  prices  fell  much  below 
the  normal  rates.  The  strain  of  this  over-supply  and 
fall  of  prices  bore  hard  on  the  domestic  manufacturers, 
especially  on  those  who  had  begun  and  carried  on  opera- 
tions during  the  restrictive  period  ;  and  many  of  them  were 
compelled  to  cease  production  and  to  abandon  their  works. 
This  abnormal  period,  which  had  its  counterpart  of 
feverish  excitement  and  speculation  in  Europe,  came  to 
an  end  in  1818-19.  The  civilized  world  then  settled 
down  to  recover  slowly  from  the  effects  of  a  generation 
of  war  and  destruction.  In  the  United  States  the  cur- 
rency bubble  was  pricked  in  the  latter  part  of  1818. 
Prices  began  to  fall  rapidly  and  heavily,  and  continued  to 
fall  through  1819.  The  prices  of  the  agricultural  staples 
of  the  North  and  South  underwent  the  greatest  change, 
for  the  harvests  in  Europe  were  again  good  in  1818,  the 
English  corn-laws  of  1816  went  into  operation,  and  the 
demand  for  cotton  fell  off.  A  new  scale  of  monetary  ex- 
change gradually  went  into  operation.  During  the  period 
of  transition  there  was,  as  there  always  is  in  such  periods, 
much  suffering  and  uneasiness  ;  but  gradually  the  difficul- 
ties of  adjusting  old  contracts  and  engagements  were 
overcome,  and  the  habits  of  the  people  accommodated 


INDUSTRIAL  HISTORY  OF  THE  UNITED   STATES.    21] 

themselves  to  the  new  regime.  Within  three  or  four 
years  after  1819  the  effects  of  the  crash  were  no  longer 
felt  in  most  parts  of  the  country. 

Two  results  which  it  is  imporfent  to  note  in  this  con- 
nection followed  from  th£  crisis  oL-lSTp:  first,  a  great 
alteration  in  the  position  and  prospects  of  manufacturing 
industries ;  and  second,  the  rise  of  a  strong  public  feeling 
in  favor  of  protecting  these  industries,  and  the  final  en- 
actment of  legislation  for  that  purpose.  The  first  of 
these  results  was  due  primarily  to  the  fact  that  the  fall  in 
prices  after  1819  did-not  so  greatly' affect  most  manufac- 
tured goods  as  it  did  other  articles.  The  prices  of  manu- 
factured goods  had  already  declined,  in  consequence  of 
the  heavy  importations  in  the  years  immediately  follow- 
ing the  war.  When,  therefore,  the  heavy  fall  took  place 
in  1819  in  the  prices  of  food  and  of  raw  materials,  in  the 
gains  of  agriculture,  in  money  wages  and  money  rents, 
the  general  result  was  advantageous  for  the  manufacturers. 
They  were  put  into  a  position  to  produce  with  profit  at 
the  lower  prices  which  had  before  been  unprofitable,  and 
to  meet  more  easily  foreign  competition.  After  the  first 
shock  was  over,  and  the  system  of  exchange  became 
cleared  of  the  confusion  and  temporary  stoppage  which 
must  attend  all  great  fluctuations  in  prices;  this  result 
was  plainly  felt.1  It  is  easy  to  see  that  the  whole  process 

1  "  The  abundance  of  capital,  indicated  by  the  avidity  with  which  loans 
are  taken  at  the  reduced  rate  of  five  per  cent. ,  the  reduction  in  the  wages  of 
labor,  and  the  decline  in  the  price  of  property  of  all  kinds,  all  concur  favor- 
ably for  domestic  manufactures. " — Clay  Speech  of  1820.  ' '  Works,"  I. ,  419. 


22  PROTECTION  TO   YOUNG  INDUSTRIES. 

was  nothing  more  than  the  evolution  of  the  new  state  of 
things  which  was  to  take  the  place  of  that  of  the  period 
before  1808.  In  that  earlier  period  manufactured  goods, 
so  far  as  they  could  be  obtained  by  importation  at  all, 
were  imported  cheaply  and  easily  by  means  of  large  ex- 
ports and  freight  earnings.  These  resources  were  now 
largely  cut  off.  Exports  declined,  and  imports  in  the  end 
had  to  follow  them.  The  tightening  of  the  English 
corn-law,  and  the  general  restriction  of  trade  and  naviga- 
tion by  England  and  other  countries,  contributed  to 
strengthen  this  tendency,  and  necessarily  served  to  stimu- 
late the  growth  of  manufactures  in  the  United  States. 
That  growth  was  indeed  complicated  and  made  more 
striking  by  the  revolution  which  was  then  taking  place  in 
many  departments  of  manufacturing  industry.  Especially 
in  the  production  of  textile  fabrics,  machinery  was  rapidly 
displacing — in  England  had  already  largely  displaced — 
production  by  hand  on  a  small  scale.  Home-spun  textiles 
were  gradually  making  room  for  the  products  of  the  spin- 
ning-jenny and  the  power-loom.  The  state  of  things  that 
followed  the  crisis  of  1818-19  was  favorable  to  the  rise  of 
manufactures ;  but  the  change  took  place  not  so  much  by 
an  increase  in  the  relative  number  of  persons  engaged  in 
such  occupations,  as  in  the  substitution  of  manufactures 
in  the  modern  sense  for  the  more  simple  methods  of  the 
previous  period.1 

1  According  to  the  census  returns  of  1820  and   1840,  the  only  two  of  the 
earlier  returns  in  which  occuoations  are  enumerated,  there  were  engaged 


INDUSTRIAL   HISTORY  OF    THE     UNITED   STATES.      2 

The  second  effect  of  the  change  that  followed  the 
financial  crisis  of  1819,  was  the  strong  protective  move- 
ment which  exercised  so  important  an  influence  on  the 
political  history  of  the  next  generation.  The  diminution 
of  the  foreign  demand,  and  the  fall  in  the  prices  of  staple 
products,  naturally  gave  rise  to  a  cry  for  a  home  markets 
The  absence  of  reciprocity  and  the  restrictive  regulations 
of  England,  especially  in  face  of  the  comparatively  liberal 
import  duties  of  this  country,  furnished  an  effective  argu- 
ment to  the  advocates  of  protection.  Most  effective,  how- 
ever, was  the  argument  for  protection  to  young  industries, 
which  was  urged  with  persistency  during  the  next  ten  or 

in  manufactures  and  the  mechanic  arts  in  1820,  13.7  per  cent,  of  the  work- 
ing population  ;  in  1840,  17.1  per  cent.  In  New  England  21  per  cent, 
were  so  engaged  in  1820,  30.2  per  cent,  in  1840  ;  in  the  Middle  States  22.6 
per  cent,  in  1820,  28  per  cent,  in  1840.  Mac  Gregor,  "  Progress  of  America," 
II.,  101.  There  are  no  census  figures  before  1820.  In  1807  it  was  loosely 
estimated  that  out  of  2,358,000  persons  actively  employed,  230,000  were 
engaged  in  mechanics  and  manufactures — less  than  10  per  cent.  Blodgett, 
"  Thoughts  on  a  Plan  of  Economy,"  etc.  [1807]  p.  6. 

The  fluctuations  in  the  exports  of  wheat  flour,  which  was  the  most  im- 
portant article  of  export  among  agricultural  products  during  the  early  part 
of  the  century,  tell  plainly  the  story  of  the  country's  foreign  trade.  They 
were  as  follows,  the  figures  indicating  millions  of  dollars  : 

Yearly  average,   1803-7  (expanded  trade)      ....      8.2 

"         1808-10  (restriction) 4.0 

"         1810-12  (restrictions  removed)    ,         .         .     13.5 

1813-15  (war) 5.5 

"         1816-17  (temporary  revival)        .         .         .14.5 

Year  1818  6.0 

"      1819  .         .         .         .         .         .         .5.0 

"      1820  .......      4.3 

During  the  decade  1820-1830,  when  matters  settled  down  to  a  normal 
state,  the  yearly  export  was  between  four  and  five  millions  of  dollars.  See 
"Quarterly  Reports  of  the  Bureau  of  Statistics,"  1883-84,  No.  4,  pp.  523, 
524. 


PROTECTION  TO  YOUNG  INDUSTRIES. 

fifteen  years.  The  character  and  history  of  this  early  pro- 
tective movement  will  be  discussed  elsewhere.1  Here  it  is 
sufficient  to  note  that  its  effect  on  legislation  was  not 
merely  to  maintain  the  protective  provisions  of  the  tariff 
of  1816,  but  much  to  extend  the  protective  element  in 
tariff  legislation.  Already  in  1818  it  had  been  enacted 
that  the  duty  of  25  per  cent,  on  cottons  and  woollens 
should  remain  in  force  till  1826,  instead  of  being  reduced 
to  20  per  cent,  in  1819,  as  had  been  provided  by  the  act  of 
1816.  At  the  same  time  the  duty  on  all  forms  of  unman- 
ufactured iron  was  considerably  raised  ;  a  measure  to 
which  we  shall  have  occasion  to  refer  in  another  connec- 
tion. In  1820,  while  the  first  pressure  of  the  economic 
revulsion  bore  hard  on  the  people,  a  vigorous  attempt 
was  made  to  pass  a  high  protective  tariff,  and  it  barely 
failed  of  success,  by  a  single  vote  in  the  Senate.  In  1824 
the  protectionists  succeeded  in  passing  the  tariff  of  that 
year,  which  increased  all  duties  considerably.  Four  years 
later,  in  the  tariff  of  1828,  the  protective  movement 
reached  its  highest  point.  The  measures  which  followed 
in  1832  and  1833  moderated  the  peculiarly  offensive  pro- 
visions of  the  act  of  1828,  but  retained  the  essential  parts 
of  protection  for  some  years  longer.  On  the  whole,  from 
1816  on,  there  was  applied  for  some  twenty  years  a  con- 
tinuous policy  of  protection  ;  for  the  first  eight  years  with 
much  moderation,  but  after  1824  with  high  duties,  and 
stringent  measures  for  enforcing  them. 

1  In  the  next  essay,  pp.  68-75. 


III. 

THE  COTTON   MANUFACTURE. 

WE  turn  now  to  the  history  of  some  of  the  industries 
to  which  protection  was  applied  during  this  long  period, 
in  order  to  determine,  so  far  as  this  is  possible,  how  far 
their  introduction  and  early  growth  were  promoted  or 
rendered  possible  by  protection.  We  shall  try  to  see  how 
far  and  with  what  success  protection  to  young  industries 
was  applied.  The  most  important  of  them,  on  account 
both  of  its  magnitude  and  of  the  peculiarly  direct  applica- 
tion of  protection  to  it,  is  the  cotton  manufacture  ;  and 
we  are  fortunate  in  having,  at  the  same  time,  the  fullest 
and  most  trustworthy  accounts  of  the  early  history  of 
this  industry.1 

During  the  first  of  the  two  periods  into  which  we  have 
divided  the  early  economic  history  of  the  United  States, 
several  attempts  were  made  to  introduce  the  manufacture 
of  cotton  by  the  machinery  invented  by  Hargreaves  and 
Arkwright  in  the  latter  part  of  the  i8th  century.  One  or 

1  In  S.  Batchelder's  "  Introduction  and  Early  Progress  of  the  Cotton  Man- 
ufacture in  the  U.  S."  (1863)  ;  G.  S.  White's  "  Memoir  of  Samuel  Slater  " 
(1836)  ;  and  N.  Appleton's  "  Introduction  of  tte  Power-loom  and  Origin 
of  Lowell "  (1858). 


26 


PROTECTION  TO  YOUNG  INDUSTRIES. 


two  of  these  attempts  succeeded,  but  most  of  them  failed, 
and  the  manufacture,  which  then  was  growing  with  marvel- 
lous rapidity  in  England,  failed  to  attain  any  considerable 
development  in  this  country.  In  1787  a  factory  using  the 
new  machinery  was  established  at  Beverly,  Mass.,  and 
obtained  aid  from  the  State  treasury  ;  but  it  was  soon 
abandoned.  Similar  unsuccessful  ventures  were  made 
at  Bridgewater,  Mass.,  Norwich,  Conn.,  and  Pawtucket, 
R.  I.,  as  well  as  in  Philadelphia.  The  spinning-jenny  was 
introduced  in  all  these,  but  never  successfully  operated.' 
The  first  successful  attempt  to  manufacture  with  the  new 
machinery  was  made  by  Samuel  Slater,  at  Pawtucket, 
R.  I.  Slater  was  a  workman  who  had  been  employed  in 
Arkwright's  factories  in  England.  He  joined  to  mechani- 
cal skill  strong  business  capacity.  He  had  become  famil- 
iar with  the  system  of  carding,  drawing,  roving,  and  mule- 
spinning.  Induced  to  come  to  the  United  States  in  1798 
by  prizes  offered  by  the  Philadelphia  Society  for  Promot- 
ing Manufactures,  he  took  charge  in  the  following  year  of 
a  cotton-factory  which  had  been  begun  and  carried  on  with 
little  success  by  some  Quakers  of  Pawtucket.  He  was  suc- 
cessful in  setting  up  the  Arkwright  machinery,  and  became 
the  founder  of  the  cotton  manufacture  in  this  country. 
Through  him  machinery,  and  instruction  in  using  it,  were 
obtainable ;  and  a  few  other  factories  were  begun  under 


1  Batchelder,  p.  26  seq.;  White,  ch.  III.  The  cotton-mill  at  Norwich, 
built  in  1790,  was  operated  for  ten  years,  and  then  abandoned  as  unprofit- 
able.— Caulkins,  "  Hist,  of  Norwich,"  p.  696. 


THE   COTTON  MANUFACTURE.  27 

his  superintendence.  Nevertheless,  the  manufacture 
hardly  maintained  its  hold.  In  1803  there  were  only  four 
factories  in  the  country.1  The  cotton  manufacture  was  at 
that  time  extending  in  England  'at  a  rapid  rate,  and  the 
imports  of  cotton  goods  from  England  were  large.  The 
Treasury  reports  of  those  days  give  no  separate  statements 
of  the  imports  of  cotton  goods;  but  in  1807  it  was  esti- 
mated that  the  imports  of  cotton  goods  from  England 
amounted  to  eleven  million  dollars'  worth — a  very  large 
sum  for  those  days.2  The  consumption  of  cotton  goods 
was  large ;  but  only  an  insignificant  part  of  it  was  supplied 
by  home  production,  although  later  developments  showed 
that  this  branch  of  industry  could  be  carried  on  with  dis- 
tinct success.  The  ease  with  which  these  imports  were 
paid  for,  and  the  stimulus  which  this  period,  as  described 
in  the  preceding  pages,  gave  to  agriculture  and  com- 
merce,  account  in  part  for  the  slowness  with  which  the 
domestic  manufacture  developed.  The  fact  that  raw  cot- 
ton was  not  yet  grown  to  any  considerable  extent  in  the 
country,  together,  doubtless,  with  the  better  machinery 
and  larger  experience  and  skill  of  the  English,  account  for 
the  rest. 

When,  however,  the  period  of  restriction  began,  in 
1808,  the  importation  of  foreign  goods  was  first  impeded, 
and  soon  entirely  prevented.  The  domestic  manufacture 
accordingly  extended  with  prodigious  rapidity.  Already 

'Bishop,  "  Hist,  of  Manufactures,"  II.,  102. 

2  See  the  pamphlet  by  Blodgett  "  On  a  Plan  of  Economy,"  etc.,  already 
cited,  p.  26. 


28  PROTECTION  TO  YOUNG  INDUSTRIES. 

during  the  years  1804-8  greater  activity  must  have  pre- 
vailed ;  for  in  the  latter  year  fifteen  mills  had  been  built, 
running  8,000  spindles.  In  1809  the  number  of  mills 
built  shot  up  to  62,  with  31,000  spindles,  while  25 
more  mills  were  in  course  of  erection.1  In  1812  there 
were  50  factories  within  thirty  miles  of  Providence,  operat- 
ing nearly  60,000  spindles,  and  capable  of  operating  100,- 
ooo.2  During  the  war  the  same  rapid  growth  continued, 
rendered  possible  as  it  was  by  the  increasing  supply  of 
raw  cotton  from  the  South.  The  number  of  spindles  was 
said  to  be  80,000  in  1811,  and  500,000  in  1815.  In  1800, 
500  bales  of  cotton  had  been  used  ;  in  1805,  1,000  bales. 
In  1810  the  number  consumed  rose  to  10,000;  in  1815, 
it  was  90,000.*  These  figures  cannot  be  supposed  to  be 

1  Gallatin's  Report  on  Manufactures  in  1810  ;  "  Amer.  State  Papers, 
Finance,"  II.,  427. 

•  White:  "  Memoir  of  Slater,"  p.  188. 

3  See  the  Report  of  a  Committee  of  Congress  on  the  Cotton  Manufacture 
in  1816  ;  "  Amer.  State  Papers,  Finance,"  III,  82,  84.  This  estimate  re- 
fers only  to  the  cotton  consumed  in  factories,  and  does  not  include  that  used 
in  household  manufacture.  The  number  of  spindles  for  1815,  as  given  in 
this  report,  is  probably  much  too  large.  In  Woodbury's  Report  of  1836  on 
cotton,  the  number  of  spindles  in  use  in  factories  is  given  as  follows  : 

In  1805         .         .  4,5OO  spindles. 

"  1807         .         .  8,000        " 

"   1809        .         .  31,000        " 

"  1810        .         .  87,000       " 

"  1815        .         .         130,000       " 

"  1820        .         .         220,000       " 

"  1821        .         .         230,000       " 

"  1825        .         .         800,000       *" 

"  Exec.  Doc.,**  I  Sess.,  24  Congr.,  No.  146,  p.  51.  It  need  not  be  said 
that  these  figures  are  hopelessly  loose ;  but  they  arc  sufficient  to  support 
the  general  assertions  of  the  text. 


THE   COTTON  MANUFACTURE.  29 

at  all  accurate ;  but  they  indicate   clearly  an  enormously 
rapid  development  of  the  manufacture  of  cotton. 

The  machinery  in  almost  all  these  new  factories  was  for 
spinning  yarn  only.  Weaving  was'still  carried  on  by  the 
hand-loom,  usually  by  weavers  working  in  considerable 
numbers  on  account  for  manufacturers.  Toward  the  end 
of  the  war,  however,  a  change  began  to  be  made  almost 
as  important  in  the  history  of  textile  manufactures  as  the 
use  of  the  spinning-jenny  and  mule:  namely,  the  substitu- 
tion of  the  power-loom  for  the  hand-loom.  The  introduc- 
tion of  the  power-loom  took  place  in  England  at  about 
the  same  time,  and  some  intimation  of  its  use  seems  to 
have  reached  the  inventor  in  this  country,  Francis  C. 
Lowell.  He  perfected  the  machine,  however,  without  any 
use  of  English  models,  in  the  course  of  the  year  1814.  In 
the  same  year  it  was  put  in  operation  at  a  factory  at 
Waltham,  Mass.  There  for  the  first  time  the  entire  pro- 
cess  of  converting  cotton  into  cloth  took  place  under  one 
roof.  The  last  important  step  in  giving  textile  manufac- 
tures their  present  form  was  thus  taken.1 

When  peace  was  made  in  1815,  and  imports  began 
again,  the  newly  established  factories,  most  of  which  were 
badly  equipped  and  loosely  managed,  met  with  serious 
embarrassment.  Many  were  entirely  abandoned.  The 
manufacturers  petitioned  Congress  for  assistance ;  and 
they  received,  in  1816,  that  measure  of  help  which  the 
public  was  then  disposed  to  grant.  The  tariff  of  1816 

'Appleton,  pp.  7-11  ;  Batchelder,  pp.  60-70. 


3O  PROTECTION  TO   YOUNG  INDUSTRIES. 

levied  a  duty  of  25  per  cent,  on  cotton  goods  for  three 
years,  a  duty  considered  sufficiently  protective  in  those 
days  of  inexperience  in  protective  legislation.  At  the 
same  time  it  was  provided  that  all  cotton  cloths,  costing 
less  than  25  cents  a  yard,  should  be  considered  to  have 
cost  25  cents  and  be  charged  with  duty  accordingly ;  that 
is,  should  be  charged  25  per  cent,  of  25  cents,  or  6£  cents 
a  yard,  whatever  their  real  value  or  cost.  This  was  the 
first  of  the  minimum  valuation  provisos  which  played  so 
considerable  a  part  in  later  tariff  legislation,  and  which 
have  been  maintained  in  large  part  to  the  present  time.  A 
similar  minimum  duty  was  imposed  on  cotton-yarns.1  At 
the  time  when  these  measures  were  passed,  the  minimum 
provisos  hardly  served  to  increase  appreciably  the  weight 
of  the  duty  of  25  per  cent.  Coarse  cotton  cloths  were 
then  worth  from  25  to  30  cents,  and,  even  without  the 
provisos,  would  have  paid  little,  if  any  thing,  less  than  the 
minimum  duty.  But,  after  1818,  the  use  of  the  power- 
loom,  and  the  fall  in  the  price  of  raw  cotton,  combined 
greatly  to  reduce  the  prices  of  cotton  goods.  The  price 
of  coarse  cottons  fell  to  19  cents  in  1819,  13  cents  in 
1826,  and  8|-  cents  in  i829.2  The  minimum  duty  became 
proportionately  heavier  as  the  price  decreased,  and,  in  a 
few  years  after  its  enactment,  had  become  prohibitive  of 
the  importation  of  the  coarser  kinds  of  cotton  cloths. 

1  The  minimum  system  seems  to  have  been  suggested  by  Lowell.  Apple- 
ton,  p.  13.  Compare  Appleton's  speech  in  Congress  in  1833. — "Congres- 
sional Debates,"  IX.,  1213. 

*  Appleton,  p.  1 6. 


THE   COTTON  MANUFACTURE.  31 

During  the  years  immediately  after  the  war,  the  aid 
given  in  the  tariff  of  1816  was  not  sufficient  to  prevent 
severe  depression  in  the  cotton  manufacture.  Reference 
has  already  been  made  to  the  disadvantages  which,  under 
the  circumstances  of  the  years  1815-18,  existed  for  all 
manufacturers  who  had  to  meet  competition  from  abroad. 
But  when  the  crisis  of  1818-19  had  brought  about  a  re- 
arrangement of  prices  more  advantageous  for  manufac- 
turers, matters  began  to  mend.  The  minimum  duty  became 
more  effective  in  handicapping  foreign  competitors.  At 
the  same  time  the  power-loom  was  generally  introduced. 
Looms  made  after  an  English  model  were  introduced  in 
the  factories  of  Rhode  Island,  the  first  going  into  opera- 
tion in  1817  ;  while  in  Massachusetts  and  New  Hampshire 
the  loom  invented  by  Lowell  was  generally  adopted  after 
18I6.1  From  these  various  causes  the  manufacture  soon 
became  profitable.  There  is  abundant  evidence  to  show 
that  shortly  after  the  crisis  the  cotton  manufacture  had 
fully  recovered  from  the  depression  that  followed  the 
war.8  The  profits  made  were  such  as  to  cause  a  rapid 

1  Appleton,  p.  13  ;  Batchelder,  pp.  70-73. 

2  The  following  passage,  referring  to  the  general  revival  of  manufactures, 
may  be  quoted  :   "  The  manufacture  of  cotton  now  yields  a  moderate  profit 
to  those  who  conduct  the  business  with  the  requisite  skill  and  economy. 
The  extensive  factories  at  Pawtucket  are  still  in  operation.  ...     In  Phil- 
adelphia it  is  said  that  about  4,000  looms  have  been  put  in  operation  within 
the  last  six  months,  which  are  chiefly  engaged  in  making  cotton  goods,  and 
that  in  all  probability  they  will,  within  six  months  more,  be  increased  to 
four  times  that  number.     In  Paterson,  N.  J. ,  where,  two  years  ago,  only 
three  out  of  sixteen  of  its  extensive  factories  were  in  operation  ...  all  are 
now  in  vigorous  employment." — "  Niles's  Register,"  XXI.,  39  (i8ai).  Com- 


3-2  PROTECTION  TO  YOUNG  INDUSTRIES. 

extension  of  the  industry.  The  beginning  of  those  man- 
ufacturing villages  which  now  form  the  characteristic 
economic  feature  of  New  England  falls  in  this  period. 
Nashua  was  founded  in  1823.  Fall  River,  which  had 
grown  into  some  importance  during  the  war  of  1814,  grew 
rapidly  from  1820  to  1830.'  By  far  the  most  important 
and  the  best  known  of  the  new  ventures  in  cotton  manu- 
facturing was  the  foundation  of  the  town  of  Lowell,  which 
was  undertaken  by  the  same  persons  who  had  been  en- 
gaged in  the  establishment  of  the  first  power-loom  factory 
at  Waltham.  The  new  town  was  named  after  the  inventor 
of  the  power-loom.  The  scheme  of  utilizing  the  falls  of 
the  Merrimac,  at  the  point  where  Lowell  now  stands,  had 
been  suggested  as  early  as  1821,  and  in  the  following  year 
the  Merrimac  Manufacturing  Company  was  incorporated. 
In  1823  manufacturing  began,  and  was  profitable  from  the 
beginning ;  and  in  1824  the  future  growth  of  Lowell  was 
clearly  foreseen.3 

pare  Ibid.,  XXII.,  225,  250(1822);  XXIII.,  35,  88(1823);  and  passim. 
In  Woodbury's  cotton  report,  cited  above,  it  is  said  (p.  57)  that  "  there  was 
a  great  increase  [in  cotton  manufacturing]  in  1806  and  1807  ;  again  during 
the  war  of  1812  ;  again  from  1820  to  1825  ;  and  in  1831-32." 

1  Fox's  "  History  of  Dunstable  "  ;  Earl's  "  History  of  Fall  River,"  p.  20 
seq. 

2  See  the  account  in  Appleton,  pp.  17-25.     One  of  the  originators  of  the 
enterprise  said  in  1824  :  "  If  our  business  succeeds,  as  we  have  reason  to 
expect,  we  shall  have  here  [at  Lowell]  as  large  a  population  in  twenty 
years  from  this  time  as  there  was  in  Boston  twenty  years  ago." — Batchel- 
der,  p.  69. 

In  Bishop,  II.,  309,  is  a  list  of  the  manufacturing  villages  of  1826.  in 
which  some  twenty  places  are  enumerated. 


THE   COTTON  MANUFACTURE.  33 

From  this  sketch  of  the  early  history  of  the  cotton 
manufacture  we  may  draw  some  conclusions.  Before 
1808  the  difficulties  in  the  way  of  the  introduction  of  this 
branch  of  industry  were  such  that  fo  made  little  progress. 
These  difficulties  were  largely  artificial ;  and  though  the 
obstacles  arising  from  ignorance  of  the  new  processes  and 
from  the  absence  of  experienced  workmen,  were  partly 
removed  by  the  appearance  of  Slater,  they  were  sufficient, 
when  combined  with  the  stimulus  which  the  condition  of 
foreign  trade  gave  to  agriculture  and  the  carrying  trade, 
to  prevent  any  appreciable  development.  Had  this 
period  come  to  an  end  without  any  accompanying  politi- 
cal change — had  there  been  no  embargo,  no  non-inter- 
course act,  and  no  war  with  England — the  growth  of  the 
cotton  manufacture,  however  certain  to  have  taken  place 
in  the  end,  might  have  been  subject  to  much  friction  and 
loss.  Conjecture  as  to  what  might  have  been  is  danger- 
ous, especially  in  economic  history,  but  it  seems  reasonable 
to  suppose  that  if  the  period  before  1808  had  come  to  an 
end  without  a  jar,  the  eager  competition  of  well-estab- 
lished English  manufacturers,  the  lack  of  familiarity  with 
the  processes,  and  the  long-continued  habit,  especially  in 
New  England,  of  almost  exclusive  attention  to  agriculture, 
commerce,  and  the  carrying  trade,  might  have  rendered 
slow  and  difficult  the  change,  however  inevitable  it  may 
have  been,  to  greater  attention  to  manufactures.  Ujid£J: 
such  circumstances  there  might  have  been  room  for  the 
legitimate  application  of  protection  to  the  cotton  manu- 


34  PROTECTION  TO  YOUNG  INDUSTRIES. 

facture  as  a  young  industry.  But  this  period,  in  factv 
came  to  an  end  with  a  violent  shock,  which  threw  indus- 
try out  of  its  accustomed  grooves,  and  caused  the  striking 
growth  of  the  cotton  manufacture  from  1808  to  1815. 
The  transition  caused  much  suffering,  but  it  took  place 
sharply  and  quickly.  The  interruption  of  trade  was  equiv- 
alent to  a  rude  but  vigorous  application  of  protection, 
which  did  its  work  thoroughly.  When  peace  came,  in 
1815,  it  found  a  large  number  of  persons  and  a  great 
amount  of  capital  engaged  in  the  cotton  manufacture, 
and  the  new  processes  of  manufacture  introduced  on  an 
extensive  scale.  Under  such  circumstances  the  industry 
was  certain  to  be  maintained  if  it  was  for  the  economic 
interest  of  the  country  that  it  should  be  carried  on. 

The  duties  of  the  tariff  of  1816,  therefore,  can  hardly 
be  said  to  have  been  necessary.  Nevertheless,  they  may 
have  been  of  service.  The  assistance  they  gave  was,  it  is 
true,  insignificant  in  comparison  with  the  shelter  from  all 
foreign  competition  during  the  war.  Indeed,  most  manu- 
facturers desired  much  higher  duties  than  were  granted.1 
It  is  true,  also,  that  the  minimum  duty  on  cottons  was 
least  effective  during  the  years  immediately  after  the  war, 
when  the  price  of  cottons  was  higher,  and  the  duty  was 
therefore  proportionately  less  high.  But  these  years  be- 

1  "  In  1816  a  new  tariff  was  to  be  made.  The  Rhode  Island  manufac- 
turers were  clamorous  for  a  very  high  specific  duty.  Mr.  Lowell's  views  on 
the  tariff  were  much  more  moderate,  and  he  finally  brought  Mr.  Lowndes 
and  Mr.  Calhoun  to  support  the  minimum  of  6%  cents  a  yard,  which  was 
carried." — Appleton,  p.  13. 


THE   COTTON  MANUFACTURE.  35 

tween  the  close  of  the  war  and  the  general  fall  of  prices 
in  1819  were  trying  for  the  manufacturers.  The  normal 
economic  state,  more  favorable  for  them,  was  not  reached 
till  the  crisis  of  1818-19  was  well  over.  During  the  inter- 
vening years  the  minimum  duty  may  have  assisted  the 
manufacturers  without  causing  any  permanent  charge  on 
the  people.  The  fact  that  careful  and  self-reliant  men, 
like  the  founders  of  the  Waltham  and  Lowell  enterprises4 
were  most  urgent  in  advising  the  adoption  of  the  rates 
of  1816 — at  a  time,  too,  when  the  practice  of  appealing  to 
Congress  for  assistance  when  in  distress  had  not  yet  be- 
come common  among  manufacturers — may  indicate  that 
those  rates  were  of  service  in  encouraging  the  continuance 
of  the  manufacture.  How  seriously  its  progress  would 
have  been  impeded  or  retarded  by  the  absence  of  duties, 
cannot  be  said.  On  the  whole,  although  the  great  im- 
pulse to  the  industry  was  given  during  the  war,  the  duties 
on  cottons  in  the  tariff  of  1816  may  be  considered  a  judi- 
cious application  of  the  principle  of  protection  to  young 
industries. 

Before  1824,  the  manufacture,  as  w'e  have  seen,  was  se- 
curely  established.  The  further  application  of  protection 
in  that  and  in  the  following  years  was  needless,  and,  so  far 
as  it  had  any  effect,  was  harmful.  The  minimum  valua- 
tion was  raised  in  1824  to  30  cents,  and  in  1828  to  35 
cents.  The  minimum  duties  were  thereby  raised  to  7^-  and 
8f  cents  respectively.  By  1824  the  manufacture  had  so 
firm  a  hold  that  its  further  extension  should  have  been 


36  PROTECTION  TO   YOUNG  INDUSTRIES. 

left  to  individual  enterprise,  which  by  that  time  might 
have  been  relied  on  to  carry  the  industry  as  far  as  it  was 
for  the  economic  interest  of  the  country  that  it  should  be 
carried.  The  increased  duties  of  1824  and  1828  do  not 
come  within  the  scope  of  the  present  discussion. 


IV. 

THE  WOOLLEN   MANUFACTURE. 

THE  sudden  and  striking  growth  of  the  cotton  manu- 
facture in  the  last  hundred  years  has  caused  its  history,  in 
this  country  as  in  others,  to  be  written  with  comparative 
fulness.  Of  the  early  history  of  the  manufacture  of 
woollen  goods  in  the  United  States  we  have  but  scanty 
accounts  ;  but  these  are  sufficient  to  show  that  the  general 
course  of  events  was  similar  to  that  in  cotton  manufac- 
turing. During  the  colonial  period  and  the  years  imme- 
diately after  the  Revolution,  such  woollen  cloths  as  were 
not  spun  and  woven  in  households  for  personal  use  were 
imported  from  England.  The  goods  of  household  manu- 
facture, however,  formed,  and  for  many  years  after  the  in- 
troduction of  machinery  continued  to  form,  by  far  the 
greater  part  of  those  in  use.  The  first  attempt  at  making 
woollens  in  large  quantities  is  said  to  have  been  made  at 
Ipswich,  Mass.,  in  1792  ;  but  no  machinery  seems  to  have 
been  used  in  this  undertaking.  In  1794  the  new  machin- 
ery was  for  the  first  time  applied  to  the  manufacture  of 
wool,  and  it  is  noteworthy  that,  as  in  the  case  of  the  cot- 
ton manufacture,  the  machinery  was  introduced  by  En- 

37 


38  PROTECTION  TO  YOUNG  INDUSTRIES. 

lish  workmen.  These  were  the  brothers  Arthur  and 
John  Scholfield,  who  came  to  the  United  States  in  1793, 
and  in  the  next  year  established  a  factory  at  Byfield, 
Mass.  Their  machinery,  however,  was  exclusively  for  card- 
ing  wool,  and  for  dressing  (fulling)  woollen  goods  ;  and 
for  the  latter  purpose  it  was  probably  in  no  way  different 
from  that  of  the  numerous  fulling-mills  which  were  scat- 
tered over  the  country  during  colonial  times.  Spinning 
and  weaving  were  done,  as  before,  on  the  spinning-wheel 
and  the  hand-loom.  The  Scholfields  introduced  carding- 
machinery  in  place  of  the  hand-cards,  and  seem  to  have 
carried  on  their  business  in  several  places  with  success.  A 
Scotchman,  James  Saunderson,  who  emigrated  in  1794, 
also  introduced  carding-machines  at  New  Ipswich,  N.  H., 
in  1801.  Their  example,  however,  was  followed  by  few. 
Carding-machines  were  introduced  in  a  few  other  places 
between  1800  and  1808  ;  but  no  development  of  the  busi- 
ness of  systematically  making  cloth,  or  preparing  wool 
for  sale,  took  place.  The  application  of  machinery  for 
spinning  does  not  seem  to  have  been  made  at  all.1  One 
great  difficulty  in  the  way  of  the  woollen  manufacture  was 
the  deficient  supply  and  poor  quality  of  wool.  The 
means  of  overcoming  this  were  supplied  when  in  1802  a 
large  flock  of  fine  merino  sheep  was  imported  from  Spain, 

1  See  a  sketch  of  the  early  history  of  the  woollen  manufacture  in  Taft's 
"  Notes  on  the  Introduction  of  the  Woollen  Manufacture."  Compare  the 
same  writer's  account  in  "  Bulletin  National  Ass.  of  Wool  Manufacturers," 
II.,  478-488  and  the  scattered  notices  in  Bishop,  "  Hist,  of  Manufactures," 
I.,  421,  and  II.,  106,  109,  118,  etc. 


THE    WOOLLEN  MANUFACTURE.  39 

followed  in  1809  an<^  1810  by  several  thousand  pure  me- 
rinos from  the  same  country.1  But  imports  from  England 
continued  to  be  large,  and  those  woollen  cloths  that  were 
not  homespun  were  obtained  almost  exclusively  from  the 
mother  country.2 

When  the  period  of  restriction  began  in  1808,  the  wool- 
len  manufacture  received,  like  all  other  industries  in  the 
same  position,  a  powerful  stimulus.  The  prices  of  broad- 
cloth, then  the  chief  cloth  worn  besides  homespun,  rose 
enormously,  as  did  those  of  flannels,  blankets,  and  other 
goods,  which  had  previously  been  obtained  almost  exclu- 
sively by  importation.  We  have  no  such  detailed  state- 
ments as  are  given  of  the  rise  of  the  cotton  manufacture, 
It  is  clear,  however,  that  the  manufacture  of  woollen 
goods,  which  had  had  no  real  existence  before,  began, 
and  was  considerably  extended.  The  spinning  of  wool  by 


,  II.,  94,  134. 

2  The  United  States  were  important  customers  of  woollens  for  England, 
as  appears  from  the  following  figures,  which  give  in  millions  of  pounds 
sterling  the  total  exports  of  woollens  from  England,  and  those  of  exports  to 

the  United  States. 

Total  To  the  U.  S. 


1790  •  •  5-2 

1791  •  •  5-5 

1792  •  •  5-5 

1793  •  .  3-8 


1794  ..  4-4  ... 

1795  ..  5-2  ...  2.0 

1796  ..  6.0  ...  2.3 

1797  ..  4-9  ..•  i-9 

1798  ..  6.5  ...  2.4 

1799  ..  6.9  ...  2.8 
Brothers,  "  Wool  and  Wool  Manufactures  of  Great  Britain,"  143,  144 


40  PROTECTION  TO   YOUNG  INDUSTRIES. 

machinery  was  introduced,  and  goods  were  made  for  sale 
on  a  large  scale.  As  early  as  1810  the  carding  and  spin- 
ning of  wool  by  machinery  was  begun  in  some  of  the 
cotton  mills  in  Rhode  Island.1  In  Northampton,  Mass., 
Oriskany,  N.  Y.,  and  other  places,  large  establishments 
for  the  manufacture  of  woollen  goods  and  of  satinets 
(mixed  cotton  and  woollen  goods)  sprang  up.  The  value 

I  of  woollen  goods  made  in  factories  is  said  to  have  risen 
from  $4,000,000  in  1810  to  $19,000,000  in  i8i5.8 

After  1815  the  makers  of  woollens  naturally  encountered 
great  difficulties  in  face  of  the  renewed  and  heavy  impor- 
tations of  English  goods.     The  tariff  of  1816  gave  them 
the  same  duty  that  was  levied  on  cottons,  25  per  cent.,  to 
be  reduced  in  three  years  to  20  per  cent.     The  reduction 
of  the  duty  to  20  per  cent.,  which  was  to  have  taken  place 
in  1819,  was  then  postponed,  and  in  the  end  never  took 
v  place,    v&o  minimum    valuation    was   fixed    for   woollen 
goods ;  hence  there  was  not,  as  for  cotton  goods,  a  mini- 
mum duty.     Wool  was  admitted  at  a  duty  of  15  percent. 
I  The  scheme  of  duties,   under  the   tariff   of    1816,    thus 
I  afforded  no  very  vigorous  protection.      Nor  did  the  provi- 
sions of  the  act  of  1824  materially  improve  the  position  of 

••• 

the  woollen  manufacturers.  The  duty  on  woollen  goods 
was  in  that  act  raised  to  30  per  cent,  in  the  first  instance, 
and  to  33 \  per  cent,  after  1825.  At  the  same  time  the 

1  Gallatin's  report  of  1810,  "  Am.  State  Papers,  Finance,"  II.  427  ;  Taft, 

44- 

*  "  Bulletin  Wool  Manufacturers,"  II.,  486.     This  is  hardly  more  than  a 
loose,  though  significant,  guess. 


THE  WOOLLEN  MANUFACTURE.  41 

duty  on  wool  (except  that  costing  ten  cents  a  pound  or 
less)  was  raised  to  20  per  cent,  in  the  first  place,  to  25  per 
cent,  after  1825,  and  to  30  per  cent,  after  1826.  If  foreign 
wool  had  to  be  imported  to  supplement  the  domestic 
supply, — and  such  a  necessity  has  constantly  existed  in 
this  country  since  1816, — the  increased  price  of  wool  in 
this  country,  as  compared  with  other  countries  which  ad- 
mitted wool  free  or  at  a  lower  duty,  would  tend  to  make 
the  effectual  protection  to  woollen  manufacturers  far 
from  excessive. 

Notwithstanding  the  very  moderate  encouragement 
given  from  1816  to  1828,  the  woollen  manufacture  steadily 
progressed  after  the  crisis  of  1819,  and  in  1828  was 
securely  established.  During  the  years  from  the  close  of 
the  war  till  1819  much  embarrassment  was  felt,  and  many 
establishments  were  given  up  ;  but  others  tided  over  this 
trying  time.1  After  1819  the  industry  gradually  responded 
to  the  more  favorable  influences  which  then  set  in  for 
manufactures,  and  made  good  progress.  During  1821 
and  1822  large  investments  were  made  in  factories  for 
making  woollen  cloths,  especially  in  New  England.2 
In  1823  the  manufacturers  of  woollens  in  Boston 
were  sufficiently  numerous  to  form  an  independent 

1  Thus  a  large  factory  in  Northampton,  built  in  1809  (Bishop,  II.,  136), 
was  still  in  operation  in  1828  ("Am.  State  Papers,  Finance,"  V.,  815).  In 
Taft's  "  Notes  "  there  is  mention  (pp.  39-40)  of  the  Peacedale  Manufacturing 
Company,  which  began  in  1804,  and  has  lasted  to  the  present  time.  It  is 
said  that  the  spinning- jenny  was  first  applied  to  wool  in  this  factory. 

4  Bishop,  II.,  270,  294  ;  Niles,  XXII.,  225. 


42  PROTECTION  TO  YOUNG  INDUSTRIES. 

organization  for  the  promotion  of  their  interests,  which 
were,  in  that  case,  to  secure  higher  protective  duties.1 
The  best  evidence  which  we  have  of  the  condition  of  the 
industry  during  these  years  is  to  be  found  in  the  testi- 
mony given  in  1828  by  various  woollen  manufacturers  be- 
fore the  Committee  of  the  House  of  Representatives  on 
Manufactures.  This  testimony  shows  ^clearly  that  the 
industry  was  established  in  1828  on  such  a  scale  that  the 
difficulties  arising  from  lack  of  skill  and  experience,  unfa- 
miliarity  with  machinery  and  methods,  and  other  such 
temporary  obstacles,  no  longer  had  influence  in  prevent- 
ing its  growth.3  The  capital  invested  by  the  thirteen 
manufacturers  who  testified  before  this  committee  varied 
from  $20,000  to  $200,000,  the  average  being  $85,000. 
The  quantity  of  wool  used  by  each  averaged  about  62,000 
pounds  per  year.  These  figures  indicate  a  scale  of  opera- 
tion very  considerable  for  those  days.  Six  of  the  fac- 
tories referred  to  had  been  established  between  1809  an<^ 
1815.  With  the  possible  exception  of  one,  in  regard  to 
which  the  date  of  foundation  was  not  stated,  none  had  been 
established  in  the  years  between  1815  and  1 820 ;  the  remain- 
ing six  had  been  built  after  1820.  Spinning-machinery  was. 
in  use  in  all.  Some  used  power-looms,  others  hand-looms. 
The  application  of  the  power-loom  to  weaving  woollens,  said 
one  manufacturer,  had  been  made  in  the  United  States 


>  Niles,  XXV.,  148,  189, 

2  The  testimony  is  printed  in  full  in  "American  State  Papers,  Finance, ' 
V.,  792-832. 


THE  WOOLLEN  MANUFACTURE.  43 

earlier  than  in  England.1  An  indication,  similar  to  this, 
of  the  point  reached  by  the  American  producers  in  the 
use  of  machinery,  was  afforded  by  the  difference  of  opin- 
ion in  regard  to  the  comparative  merits  of  the  jenny,  and 
of  the  "  Brewster,"  a  spinning-machine  of  recent  inven- 
tion. Goods  of  various  kinds  were  made — broadcloths, 
cassimeres,  flannels,  satinets,  and  kerseys.  The  opinion 
was  expressed  by  several  that  the  mere  cost  of  manufac- 
turing was  not  greater  in  the  United  States  than  in  Eng- 
land ;  that  the  American  manufacturer  could  produce,  at 
as  low  prices  as  the  English,  if  he  could  obtain  his  wool 
at  as  low  prices  as  his  foreign  competitor."  This  testi- 

1  Testimony,   p.    824.      The  same  statement  is    made   by  Bishop,  II., 
317.     In  Taft's  "  Notes,"  p.  39,  there  is  an  account  of  the  application  of 
the  power-loom  to  weaving  saddle-girths  as  early  as   1814.     In   1822  the 
power-loom  for  weaving  broadcloths  seems  to  have  been  in  common  use. — 
Taft,  p.  43. 

2  "  Broadcloths  are  now  (1828)  made  at  much  less  expense  of  labor  and 
capital  than  in  1825,  by  the  introduction  of  a  variety  of  improved  and  labor- 
saving  machinery,  amongst  which  may  be  named  the  dressing-machine  and 
the  broad  power-loom  of  American  invention  "  (p.  824).     The  power-loom 
was  very  generally  used.     "  Since  the  power-looms  have  been  put  in  opera- 
tion, the  weaving  costs  ten  cents  per  yard,  instead  of  from  eighteen  to 
twenty-eight  cents  "  (p.  814).     Shepherd,  of  Northampton,  to  whose  factory 
reference  has  already  been  made  (ante  p.  44,  note  i),  said  :   "  The  differ- 
ence in  price  of  cloths  (in  the  United  States  and  in  England)  would  be  the 
difference  in  the  price  of  the  wool,  as,  in  my  opinion,  we  can  manufacture 
as  cheap  as  they  (the  English)  can  "  (p.  816).     In  the  same  connection 
another  manufacturer  said  :  ' '  The  woollen  manufacture  is  not  yet  fairly 
established  in  this  country,  but  I  know  no  reason  why  we  cannot  manufac- 
ture as  well  and  as  cheap  as  they  can  in  England,  except  the  difference  in 
the  price  of  labor,  for  which,  in  my  opinion,  we  are  fully  compensated  by 
other  advantages.     Our  difficulties  are  not  the  cost  of  manufacturing,  but 
the  great  fluctuations  in  the  home  market,  caused  by  the  excessive  and  irreg- 


44  PROTECTION  TO  YOUNG  INDUSTRIES. 

mony  seems  to  show  conclusively  that  at  the  time  when 
it  was  given  the  woollen  manufacture  had  reached  that 
point  at  which  it  might  be  left  to  sustain  itself ;  at  which 
accidental  or  artificial  obstacles  no  longer  stood  in  the 
way  of  its  growth.  That  many  of  the  manufacturers 
themselves  wanted  higher  duties,  is,  for  obvious  reasons, 
not  inconsistent  with  this  conclusion.  Progress  had  been 
less  certain  and  rapid  than  in  the  case  of  the  kindred  cot- 
ton manufacture,  for  the  conditions  of  production  were 
less  distinctly  favorable.  The  displacement  of  the  house- 
hold products  by  those  of  the  factory  was  necessarily  a 
gradual  process,  and  made  the  advance  of  the  woollen 
manufacture  normally  more  slow  than  that  of  the  kindred 
industry.  But  the  growth  of  the  cotton  manufacture,  so 
similar  to  that  of  wool,  of  itself  removed  many  of  the  ob- 
stacles arising  from  the  recent  origin  of  the  latter.  The 
use  of  machinery  became  common,  and,  when  the  first 
great  steps  had  been  taken,  was  transferred  with  com- 
parative ease  from  one  branch  of  textile  production  to 
another.  In  1828,  when  for  the  first  time  heavy  protec- 
tion was  given  by  a  complicated  system  of  minimum  du- 
ties, and  when  the  actual  rates  rose,  in  some  cases,  to 
over  100  per  cent.,  this  aid  was  no  longer  needed  to  sus- 

ular  foreign  importations.  The  high  prices  we  pay  for  labor  are,  in  my 
opinion,  beneficial  to  the  American  manufacturer,  as  for  those  wages  we 
get  a  much  better  selection  of  hands,  and  those  capable  and  willing  to  per- 
form a  much  greater  amount  of  labor  in  a  given  time.  The  American  man- 
ufacturer also  uses  a  larger  share  of  labor-saving  machinery  than  the  Eng- 
lish "  (p.  829). 


THE    WOOLLEN  MANUFACTURE.  45 

tain  the  woollen  manufacture.     The  period  of  youth  had/ 
then  been  past. 

It  appears  that  direct  protective  legislation  had  even 
less  influence  in  promoting  the  introduction  and  early 
growth  of  the  woollen  than  of  the  cotton  manufacture. 
The  events  of  the  period  of  restriction,  from  1808  to  1815, 
led  to  the  first  introduction  of  the  industry,  and  gave  it 
the  first  strong  impulse.  Those  events  may  indeed  be 
considered  to  have  been  equivalent  to  effective,  though 
crude  and  wasteful,  protective  legislation,  and  it  may  be 
that  their  effect,  as  compared  with  the  absence  of  growth 
before  1808,  shows  that  protection  in  some  form  was 
needed  to  stimulate  the  early  growth  of  the  woollen 
manufacture.  But,  by  1815,  the  work  of  establishing  the 
manufacture  had  been  done.  The  moderate  duties  of 
the  period  from  1816  to  1828,  partly  neutralized  by  the 
duties  on  wool,  may  have  something  to  sustain  it ;  but 
the  position  gained  in  1815  would  hardly  have  been  lost 
in  the  absence  of  these  duties.  By  1828,  when  strong  pro- 
tection was  first  given,  a  secure  position  had  certainly 
been  reached. 


V. 

THE  IRON   MANUFACTURE. 

WE  turn  now  to  the  early  history  of  the  iron  manufac- 
ture,— the  production  of  crude  iron,  pig  and  bar.  We 
shall  examine  here  the  production,  not  of  the  finished 
article,  but  of  the  raw  material.  It  is  true  that  the  pro- 
duction of  crude  iron  takes  place  under  somewhat  different 
conditions  from  those  which  affect  cotton  and  woollen 
goods.  The  production  of  pig-iron  is  more  in  the  nature 
of  an  extractive  industry,  and,  under  ordinary  circum- 
stances, is  subject  in  some  degree  to  the  law  of  diminishing 
returns.  To  commodities  produced  under  the  conditions 
of  that  law,  the  argument  for  protection  to  young  indus- 
tries has  not  been  supposed,  at  least  by  its  more  moderate 
advocates,  to  apply,  since  the  sites  where  production  wilj 
be  carried  on  to  best  advantage  are  apt  to  be  determined 
by  unalterable  physical  causes.1  It  happens,  however, 
that  changes  in  the  processes  of  production,  analogous  to 
those  which  took  place  in  the  textile  industries,  were 
made  at  about  the  same  time  in  the  manufacture  of  crude 

1  See,  for  instance,  List,  "  System  of  National  Economy,"  Phila.,  1856, 
pp.  296-300. 

46 


THE  IRON  MANUFACTURE.  47 

iron.  These  changes  rendered  more  possible  the  success- 
ful application  of  the  principle  of  protection  to  young 
industries,  and  make  the  discussion  of  its  application 
more  pertinent.  There  is  another  reason  why  we  should 
consider,  in  this  connection,  the  raw  material  rather  than 
the  finished  article.  The  production  of  the  latter,  of  the 
tools  and  implements  made  of  iron,  has  not,  in  general, 
needed  protection  in  this  country,  nor  has  protection  often 
been  asked  for  it.  The  various  industries  by  which  crude 
iron  is  worked  into  tools  and  consumable  articles  were 
firmly  established  already  in  the  colonial  period,  and  since 
then  have  maintained  themselves  with  little  difficulty. 
The  controversy  on  the  protection  of  the  iron  manufac- 
ture has  been  confined  mainly  to  the  production  of  pig. 
and  bar-iron.  It  is  to  this,  therefore,  that  we  shall  direct 
our  attention.  The  production  of  pig-  and  bar-iron  will 
be  meant  when,  in  the  following  pages,  the  "  iron  manu- 
facture "  is  spoken  of. 

During  the  eighteenth  century  England  was  a  country 
importing,  and  not,  as  she  is  now,  one  exporting,  crude 
iron.  The  production  of  pig-  and  bar-iron  was  accordingly 
encouraged  in  her  colonies,  and  production  was  carried  on 
in  them  to  an  extent  considerable  for  those  days.  Large 
quantities  of  bar-iron  were  exported  from  the  American 
colonies  to  England.1  The  manufacture  of  iron  was 

1  See  the  tables  in  Bishop,  I.,  629,  and  Scrivener,  "  History  of  the  Iron 
Trade,"  p.  81.  In  1740  the  total  quantity  of  iron  produced  in  England 
was  about  17,000  tons  ;  at  that  time  from  2,000  to  3,000  tons  annually  were 
regularly  imported  from  the  American  colonies. 


48  PROTECTION  TO   YOUNG  INDUSTRIES. 

firmly  established  in  the  colonies  according  to  the  meth- 
ods common  at  the  time.  During  the  second  half  of  the 
eighteenth  century,  however,  the  great  change  took  place 
in  England  in  the  production  of  iron  which  has  placed 
that  country  in  its  present  position  among  iron-making 
countries,  and  has  exercised  so  important  an  influence  on 
the  material  progress  of  our  time.  Up  to  that  time  char- 
coal had  been  used  exclusively  for  smelting  iron,  and  the 
iron  manufacture  had  tended  to  fix  itself  in  countries 
where  wood  was  abundant,  like  Norway,  Sweden,  Russia, 
and  the  American  colonies.  About  1750  the  use  of  coke 
in  the  blast  furnace  began.  The  means  were  thus  given 
for  producing  iron  in  practically  unlimited  quantities, 
without  dependence  for  fuel  on  forests  easily  exhaustible  ; 
and  in  the  latter  part  of  the  century,  when  the  steam- 
engine  supplied  the  motive  power  for  the  necessary  strong 
blast,  production  by  means  of  coke  increased  with  great 
rapidity.1  At  the  same  time,  in  1783  and  1784,  came  the 
inventions  of  Cort  for  puddling  and  rolling  iron.  By  these 
the  transformation  of  pig-iron  into  bar-iron  of  convenient 
sizes  was  effected  in  large  quantities.  Before  the  inven- 
tions of  Cort,  pig-iron  had  been  first  converted  into  bar 
under  the  hammer,  and  the  bar,  at  a  second  distinct  oper- 
ation in  a  slitting  mill,  converted  into  bars  and  rods  of  con- 
venient size.  The  rolled  bar  made  by  the  processes  of 
puddling  and  rolling — which  are  still  in  common  use — is 

1  See  the  good  account  of  the  importance  of  the  use  of  coke  (coal)  in  Je- 
rons,  "  The  Coal  Question,"  ch.  XV.,  pp.  309-316. 


THE  IRON  MANUFACTURE.  49 

inferior  in  quality,  at  least  after  the  first  rolling,  to  the 
hammered  and  slit  iron,  known  as  hammered  bar,  pro- 
duced by  the  old  method.  Cort's  processes,  however 
made  the  iron  much  more  easily'and  cheaply,  and  the 
lower  price  of  the  rolled  iron  more  than  compensated,  for 
most  purposes,  for  its  inferior  quality.  At  the  same  time 
these  processes  made  easy  and  fostered  the  change  from 
production  on  a  small  scale  to  production  on  a  large  scale. 
This  tended  to  bring  about  still  greater  cheapness,  and 
made  the  revolution  in  the  production  of  iron  as  great  as 
that  in  the  textile  industries,  and  similar  to  it  in  many  im- 
portant respects. 

During  the  period  1789-1808  these  changes  in  the  iron 
manufacture  were  too  recent  to  have  had  any  appreciable 
effect  on  the  conditions  of  production  and  supply  in  the 
United  States.  The  manufacture  of  iron,  and  its  trans- 
formation into  implements  of  various  kinds,  went  on 
without  change  from  the  methods  of  the  colonial  period. 
Pig-iron  continued  to  be  made  and  converted  into  ham- 
mered bar  in  small  and  scattered  works  and  forges.1  No 
pig-iron  seems  to  have  been  imported.  Bar-iron  was  im- 
ported; in  quantities  not  inconsiderable,  from  Russia2 ; 
but  no  crude  iron  was  imported  from  England.  The  im- 
portations of  certain  iron  articles,  not  much  advanced  be- 
yond the  crude  state,  such  as  nails,  spikes,  anchors,  cables, 
showed  a  perceptible  increase  during  this  period.* 

1  French,  "  Hist,  of  Iron  Manufacture,"  p.  16.  2  Ibid.,  p.  13. 

3  The  imports  of  iron,  so  far  as  separately  stated  in  the  Treasury  reports, 
may  be  found  in  Young's  Report  on  Tariff  Legislation,  pp.  XXVI.' 
XXXVI.  Cp.  Grosvenor,  "  JJoes  Protection  Protect?"  pp.  174,  175. 


5O  PROTECTION  TO  YOUNG  INDUSTRIES. 

Whether  this  increase  was  the  result  of  the  general  con< 
ditions  which  tended  to  swell  imports  during  this  period, 
or  was  the  first  effect  of  the  new  position  which  England 
was  taking  as  an  iron-making  country,  cannot  be  deter- 
mined. Information  on  the  state  of  the  industry  during 
this  period  is  meagre  ;  but  it  seems  to  have  been  little 
affected  by  the  protective  duties  which  Congress  enacted 
on  nails,  steel,  and  some  other  articles.  No  protection 
was  attempted  to  be  given  to  the  production  of  pig  or 
bar-iron,  for  it  was  thought  that  the  domestic  producers 
would  be  able  to  compete  successfully  with  their  foreign 
competitors  in  this  branch  of  the  iron-trade. 

During  the  period  of  restriction  from  1808  to  1815,  the 
iron  and  manufactures  of  iron  previously  imported,  had 
to  be  obtained,  as  far  as  possible,  at  home.  A  large  in- 
crease in  the  quantity  of  iron  made  in  the  country  accord- 
ingly took  place.  The  course  of  events  was  so  similar  to 
that  already  described  in  regard  to  textile  manufactures 
that  it  need  not  be  referred  to  at  length.  When  peace 
came,  there  were  unusually  heavy  importations  of  iron, 
prices  fell  rapidly,  and  the  producers  had  to  go  through 
a  period  of  severe  depression. 

In  1816  Congress  was  asked  to  extend  protection  to 
the  manufacture  of  iron,  as  well  as  to  other  industries. 
The  tariff  of  1 8 16  imposed  a  duty  of  45  cents  a  hundred- 
weight on  hammered-bar  iron,  and  one  of  $1.50  a  hun- 
dred-weight on  rolled  bar,  with  corresponding  duties  on 
sheet,  hoop,  and  rod  iron.  Pig-iron  was  admitted  under 


THE  IRON  MANUFACTURE.  5! 

an  ad  valorem  duty  of  20  per  cent.  At  the  prices  of  bar- 
iron  in  1816,  the  specific  duty  on  hammered  bar  was 
equivalent  to  about  20  per  cent.,1  and  was,  therefore,  but 
little  higher  than  the  rates  of  15  ancl  17^  per  cent,  levied,/ 
in  1804  and  1807.  The  duty  on  rolled  bar  was  much 
higher,  relatively  to  price,  as  well  as  absolutely,  than  that 
on  hammered  bar,  and  was  the  only  one  of  the  iron  duties 
of  1816  which  gave  distinct  and  vigorous  protection. 
These  duties  were  not  found  sufficient  to  prevent  the 
manufacturers  from  suffering  heavy  losses,  and  more  effec- 
tive protection  was  demanded.  In  1818,  Congress,  by  a 
special  act,  raised  the  duties  on  iron  considerably,  at  the 
same  time,  as  was  noted  above,2  that  it  postponed  the 
reduction  from  25  to  20  per  cent,  on  the  duty  on  cottons 
and  woollens.  Both  of  these  measures  were  concessions 
to  protective  feeling,  and  they  may  have  been  the  result 
of  an  uneasy  consciousness  of  the  disturbed  state  of  the 
country  and  of  the  demand  for  protection  which  was  to 
follow  the  financial  crisis  of  the  next  year.3  The  act  of 
1818  fixed  the  duty  on  pig-iron  at  50  cents  per  hundred- 
weight— the  first  specific  duty  imposed  on  pig-iron ;  ham- 
mered bar  was  charged  with  75  cents  a  hundred-weight, 
instead  of  45  cents,  as  in  1816;  and  higher  duties  were 
put  on  castings,  anchors,  nails,  and  spikes.4  These  duties 

1  See  the  tables  of  prices  in  French,  pp.  35,  36. 
9  Ante,  p.  27. 

3  There  is  nothing  in  the  Congressional  debates  on  the  acts  of  1818  to  show 
what  motives  caused  them  to  be  passed. 

4  "  Statutes  at  Large,"  III.,  460. 


52  PROTECTION  TO  YOUNG  INDUSTRIES. 

were  comparatively  heavy  ;  and  with  a  steady  fall  in  the 
price  of  iron,  especially  after  the  crisis  of  1818-19,  they 
became  proportionately  heavier  and  heavier.  Neverthe- 
less, in  the  tariff  of  1824  they  were  further  increased. 
The  rate  on  hammered  bar  went  up  to  90  cents  a  hundred- 
weight ;  that  on  rolled  bar  still  remained  at  $1.50,  as  it 
had  been  fixed  in  1816.  In  1828  a  still  further  increase 
was  made  in  the  specific  duties  on  all  kinds  of  iron,  al- 
though the  continual  fall  in  prices  was  of  itself  steadily 
increasing  the  weight  of  the  specific  duties.  The  duty  on 
pig-iron  went  up  to  62^  cents  a  hundred-weight ;  that  on 
hammered  bar  to  a  cent  a  pound  (that  is,  $1.12  a  hundred- 
weight) ;  that  on  rolled  bar  to  $37  a  ton.  In  1832  duties 
were  reduced  in  the  main  to  the  level  of  those  of  1824,  and 
in  1833  the  Compromise  Act,  after  maintaining  the  duties 
of  1832  for  two  years,  gradually  reduced  them  still  further, 
till  in  1842  they  reached  a  uniform  level  of  20  per  cent.  On 
the  whole,  it  is  clear  that^fter  1818  a  system  of  increasingly 
heavy  protection  was  applied  to  the  iron  manufacture, 
and  that  for  twenty  years  this  protection  was  maintained 
without  a  breakj  From  1818  till  1837  or  1838,  when  the 
reduction  of  duty  under  the  Compromise  Act  began  to 
take  effect  to  an  appreciable  extent,  the  duties  on  iron  in 
its  various  forms  ranged  from  40  to  100  per  cent,  on  the 
value. 

It  is  worth  while  to  dwell  for  a  moment  on  the  heavy 
duty  on  rolled  iron — much  higher  than  that  on  hammered 
iron — which  was  adopted  in  1816,  and  maintained  through- 


THE  IRON  MANUFACTURE.  $3 

out  this  period.  Congress  attempted  to  ward  off  the 
competition  of  the  cheaper  rolled  iron  by  this  heavy  dis- 
criminating duty,  which  in  1828  was  equivalent  to  one 
hundred  per  cent,  on  the  value.  'When  first  established 
in  1816,  the  discrimination  was  defended  on  the  ground 
that  the  rolled  iron  was  of  inferior  quality,  and  that  the 
importation  of  the  unserviceable  article  should  be  impeded 
for  the  benefit  of  the  consumer.  The  scope  of  the  change 
in  the  iron  manufacture,  of  which  the  appearance  of  rolled 
iron  was  one  sign,  was  hardly  understood  in  1816  and 
1818,  and  this  argument  against  its  use  may  have  repre- 
sented truthfully  the  animus  of  the  discriminating  duty. 
But  in  later  years  the  wish  to  protect  the  consumer  from 
impositions  hardly  continued  to  be  the  motive  for  retain- 
ing the  duty.  Rolled  bar-iron  soon  became  a  well-known 
article,  of  considerable  importance  in  commerce.  The 
discriminating  duty  was  retained  throughout,  and  in  1828 
even  increased  ;  it  was  still  levied  in  the  tariff  of  1832  ;  it 
reappeared  when  the  Whigs  carried  the  tariff  of  1842  ; 
and  it  did  not  finally  disappear  till  1846.  The  real  mo- 
tive for  maintaining  the  heavy  tax  through  these  years 
undoubtedly  was  the  unwillingness  of  the  domestic  pro- 
ducers to  face  the  competition  of  the  cheaper  article. 
The  tax  is  a  clear  illustration  of  that  tendency  to  fetter 
and  impede  the  progress  of  improvement  which  is  inhe- 
rent in  protective  legislation.  It  laid  a  considerable 
burden  on  the  community,  and,  as  we  shall  see,  it  was  of 
no  service  in  encouraging  the  early  growth  of  the  iron 


54  PROTECTION  TO  YOUNG  INDUSTRIES. 

industry.  It  is  curious  to  note  that  the  same  contest 
against  improved  processes  was  carried  on  in  France,  by 
a  discriminating  duty  on  English  rolled  iron,  levied  first 
in  1816,  and  not  taken  off  till  1860.' 

After  1815  the  iron-makers  of  the  United  States  met 
with  strong  foreign  competition  from  two  directions.  In 
the  first  place,  English  pig  and  rolled  iron  was  being  pro- 
duced with  steadily  decreasing  cost.  The  use  of  coke  be- 
came universal  in  England,  and  improvements  in  methods 
of  production  were  constantly  made.  Charcoal  continued 
to  be  used  exclusively  in  the  furnaces  of  this  country  ;  for 
the  possibility  of  using  anthracite  had  not  yet  been  dis- 
covered, and  the  bituminous  coal  fields  lay  too  far  from 
what  was  then  the  region  of  dense  population  to  be  avail- 
able. While  coke-iron  was  thus  driving  out  charcoal-iron 
for  all  purposes  for  which  the  former  could  be  used,  the 
production  of  charcoal-iron  itself  encountered  the  com- 
petition of  Sweden  and  Russia.  As  the  United  States 
advanced  in  population,  the  more  accessible  forests  became 
exhausted,  and  the  greater  quantity  of  charcoal-iron  need- 
ed with  the  increase  of  population  and  of  production, 
could  be  obtained  at  home  only  at  higher  cost.  The 
Scandinavian  countries  and  Russia,  with  large  forests  and 
a  population  content  with  low  returns  for  labor,  in  large 
part  supplied  the  increased  quantity  at  lower  rates  than 
the  iron-makers  of  this  country.  Hence  the  imports  of 
iron  show  a  steady  increase,  both  those  of  pig-iron  and 

1  Arae,  "  Etudes  sur  les  Tarifs  de  Douanes,"  I.,  145. 


THE  IRON  MANUFACTURE.  55 

and  those  of  rolled  and  hammered  bar;  the  rolled  bar 
coming  from  England,  and  the  hammered  bar  from 
Sweden  and  Russia.  The  demand  for  iron  was  increasing 
at  a  rapid  rate,  and  there  was  rotitft  for  an  increase  both 
of  the  domestic  production  and  of  imports ;  but  the  rise 
in  imports  was  marked.  Notwithstanding  the  heavy 
duties,  the  proportion  of  imported  to  domestic  iron  from 
1818  to  1840  remained  about  the  same.1 

Since  importations  continued  regularly  and  on  a  con- 
siderable scale,  the  price  of  the  iron  made  at  home  was 
clearly  raised,  at  the  seaboard,  over  the  price  of  the  for- 
eign iron  by  the  amount  of  the  duty.  The  country,  there- 
fore, paid  the  iron  tax  probably  on  the  greater  part 
used,  whether  of  foreign  or  domestic  origin,  in  the  shape 
of  prices  from  forty  to  one  hundred  per  cent,  higher  than 
those  at  which  the  iron  could  have  been  bought  abroad. 

1  On  the  production  and  imports  of  iron  in  the  years  aft**r  1830  the  reader 
is  referred  to  the  remarks  on  p.  124,  and  to  the  "  Quarterly  Journal  of  Eco- 
nomics," vol.  II.,  p.  377.  Until  the  middle  of  the  decade  1820-30  the  annual 
product  of  pig-iron  is  supposed  to  have  been  about  50,000  tons,  while  in  the 
second  half  of  the  decade  it  is  put  at  100,000  tons  and  more.  The  imports 
of  crude  iron  averaged  about  20,000  tons  per  year  in  1818-21,  about  30,000 
tons  in  1822-27,  and  rose  to  an  average  of  about  40,000  tons  in  1828-30. 
These  figures  as  to  imports  refer  mainly  to  bar-iron  ;  and  as  it  required  in 
those  days  about  if  tons  of  pig  to  make  a  ton  of  bar  (French,  p.  54),  some 
additions  must  be  made  to  the  imports  of  bar  before  a  proper  comparison 
can  be  made  between  the  domestic  and  the  imported  supply.  An  addition 
must  also  be  made  for  the  considerable  imports  of  steel,  sheet-iron,  anvils, 
anchors,  and  other  forms  of  manufactured  iron.  Figures  of  imports  are 
given  in  Grosvenor,  pp.  198,  199  ;  of  domestic  production,  by  R.  W.  Ray- 
mond, in  A.  S.  Hewitt's  pamphlet  on  "A  Century  of  Mining  and  Metallur. 
py,"  page  31. 


56  PROt  ACTION  TO  YOUNG  INDUSTRIES. 

The  fact  that  the  manufacture,  notwithstanding  the 
heavy  and  long-continued  protection  which  it  enjoyed, 
was  unable  to  supply  the  country  with  the  iron  which  it 
needed,  is  of  itself  sufficient  evidence  that  its  protection 
as  a  young  industry  was  not  successful.  It  is  an  essential 
condition  for  the  usefulness  of  assistance  given  to  a  young 
industry,  that  the  industry  shall  ultimately  supply  its 
products  at  least  as  cheaply  as  they  can  be  obtained  by 
importation ;  and  this  the  iron  manufacture  failed  to  do. 
There  is,  however,  more  direct  evidence  than  this,  that 
the  manufacture  was  slow  jo  make  improvements  in 
production,  which  might  have  enabled  it  eventually  to 
furnish  the  whole  supply  needed  by  the  country,  and  in 
this  way  might  have  justified  the  heavy  taxes  laid  for  its 
benefit.  Pig-iron  continued  to  be  made  only  with  char- 
coal. The  process  of  puddling  did  not  begin  to  be  intro- 
duced before  1830,  and  then  inefficiently  and  on  a  small 
scale.1  Not  until  the  decade  between  1830  and  1840,  at  a 
time  when  the  Compromise  Act  of  1833  was  steadily  de- 
creasing duties,  was  puddling  generally  introduced.2  The 
iron  rails  needed  for  the  railroads  built  at  this  time — the 
first  parts  of  the  present  railroad  system — were  supplied 
exclusively  by  importation.  In  1832  an  act  of  Congress 
had  provided  that  duties  should  be  refunded  on  all  im- 
ported rails  laid  down  within  three  years  from  the  date 

1  See  an  excellent  article,  by  an  advocate  of  protection,  in  the  American 
Quarterly  Review,  Vol.  IX.  (1831),  pp.  376,  379,  which  gives  very  full  in- 
formation  in  regard  to  the  state  o/  the  iron  manufacture  at  that  date. 

3  French,  p.  56. 


THE  IRON  MANUFACTURE.  57 

of  importation.  Under  this  act  all  the  first  railroads 
imported  their  rails  without  payment  of  duty.  Finally, 
the  great  change  which  put  the  iron  manufacture  on  a  firm 
and  durable  basis  did  not  come  till  the  end  of  the  cjecade 
1830-40,  when  all  industry  was  much  depressed,  and  duties 
had  nearly  reached  their  lowest  point.  That  change  con- 1  . 
sisted  in  the  use  of  anthracite  coal  in  the  blast-furnace.  J 
A  patent  for  smelting  iron  with  anthracite  was  taken  out 
in  1833  ;  the  process  was  first  used  successfully  in  1836. 
In  1838  and  1839  anthracite  began  to  be  widely  used. 
The  importance  of  the  discovery  was  promptly  recog- 
nized ;  it  was  largely  adopted  in  the  next  decade,  arid  led, 
among  other  causes,  to  the  rapid  increase  of  the  produc- 
tion of  iron,  which  has  been  so  often  ascribed  exclusively 
to  the  protection  of  the  tariff  of  1842.  With  this  change 
the  growth  of  the  iron  manufacture  on  a  great  scale  prop- 
erly begins.1 

It  seems  clear  that  no  connection  can  be  traced  between  j 
the  introduction  and  early  progress  of  the  iron  manufac-  y 
ture,  and  protective  legislation.     During  the  colonial  pe- 
riod, as  we  have  seen,  under  the  old  system  of  production 
of  iron,  the  country  had  exported  and  not  imported  iron. 
The  production  of  charcoal-iron  and  of  hammered  bar 
was  carried  on  before  the  adoption  of  the  Constitution, 
During  the  first  twenty  years  after  1789,  the  iron-makers 

1  Swank's  Report  on  "  Iron  and  Steel  Production,"  in  the  Census  of 
1880,  p.  114.  A  fuller  discussion  of  the  introduction  of  the  use  of  anthra- 
cite, and  of  the  effect  of  protective  duties  after  this  had  been  done,  will  be 
found  at  pages  122-134. 


58  PROTECTION  TO   YOUNG  INDUSTRIES. 

still  held  their  own,  although  the  progress  of  invention 
elsewhere,  and  the  general  tendency  in  favor  of  heavy  im- 
ports, caused  a  growing  importation  from  abroad.  The 
production  of  iron  by  the  old  methods  and  with  the  use 
of  charcoal  was  therefore  in  no  sense  a  new  industry.  If 
the  business  of  making  charcoal-iron  could  not  be  carried 
on  or  increased  during  this  and  the  subsequent  period, 
the  cause  must  have  lain  in  natural  obstacles  and  disad- 
vantages which  no  protection  could  remove.  After  1815, 
the  new  regime  in  the  iron  trade  had  begun ;  the  use  of 
coke  in  the  blast-furnace,  and  the  production  of  wrought- 
iron  by  puddling  and  rolling,  had  changed  completely  the 
conditions  of  production.  The  protective  legislation 
which  began  in  1818,  and  continued  in  force  for  nearly 
twenty  years,  was  intended,  it  is  true,  to  ward  off  rather 
than  to  encourage  the  adoption  of  the  new  methods  ;  but 
it  is  conceivable  that,  contrary  to  the  intentions  of  its  au- 
thors, it  might  have  had  the  latter  effect.  No  such  effect, 
however,  is  to  be  seen.  During  the  first  ten  or  fifteen 
years  after  the  application  of  protection,  no  changes  of 
any  kind  took  place.  Late  in  the  protective  period,  and 
at  a  time  when  duties  were  becoming  smaller,  the  pud- 
dling process  was  introduced.  The  great  change  which 
marks  the  turning-point  in  the  history  of  the  iron  manu- 
facture in  the  United  States — the  use  of  anthracite — be- 
gan when  protection  ceased.  It  is  probably  not  true,  as 
is  asserted  by  advocates  of  free  trade,1  that  protection  had, 

1 E.  g. ,  Grosvenor,  p.  197- 


THE  IRON  MANUFACTURE.  59 

Any  appreciable  influence  in  retarding  the  use  of  coal  in 
making  iron.  Other  causes,  mainly  the  refractory  nature 
of  the  fuel,  sufficiently  account  for  the  failure  to  use  an- 
thracite at  an  earlier  date.  The'  'successful  attempts  to 
use  anthracite  were  made  almost  simultaneously  in  Eng- 
land and  in  the  United  States.1  The  failure  to  use  coke 
from  bituminous  coal,  which  had  been  employed  in  Eng- 
land for  over  half-a-century,  was  the  result  of  the  distance 
of  the  bituminous  coal-fields  from  the  centre  of  popula- 
tion, and  of  the  absence  of  the  facility  of  transportation 
which  has  since  been  given  by  railroads.  It  is  hardly  prob- 
able, therefore,  that  protection  exercised  any  considerable 
harmful  influence  in  retarding  the  progress  of  improve- 
ment. But  it  is  clear,  on  the  other  hand,  that  no  advan-| 
tages  were  obtained  from  protection  in  stimulating  prog-] 
ress.  No  change  was  made  during  the  period  of  protec- 
tion which  enabled  the  country  to  obtain  the  metal  more 
cheaply  than  by  importation,  or  even  as  cheaply.  The 
duties  simply  taxed  the  community ;  they  did  not  serve 
to  stimulate  the  industry,  though  they  probably  did  not 
appreciably  retard  its  growth.  We  may  therefore  conclude 
that  the  duties  on  iron  during  the  generation  after  1815 
formed  a  heavy  tax  on  consumers  ;  that  they  impeded,  so 
far  as  they  went,  the  industrial  development  of  the  coun- 
try ;  and  that  no  compensatory  benefits  were  obtained  to 
offset  these  disadvantages. 

1  Swank,  pp.  114,  115. 


VI. 

CONCLUDING  REMARKS. 

THE  three  most  important  branches  of  industry  to 
which  protection  has  been  applied,  have  now  been  ex- 
amined. It  has  appeared  that  the  introduction  of  the 
cotton  manufacture  took  place  before  the  era  of  protec- 
tion, and  that — looking  aside  from  the  anomalous  condi- 
tions of  the  period  of  restriction  from  1808  to  1815 — its 
early  progress,  though  perhaps  somewhat  promoted  by 
the  minimum  duty  of  1816,  would  hardly  have  been 
much  retarded  in  the  absence  of  protective  duties.  The 
manufacture  of  woollens  received  little  direct  assistance 
before  it  reached  that  stage  at  which  it  could  maintain 
itself  without  help,  if  it  were  for  the  advantage  of  the 
country  that  it  should  be  maintained.  In  the  iron  man- 
ufacture twenty  years  of  heavy  protection  did  not  ma- 
terially alter  the  proportion  of  home  and  foreign  supply, 
and  brought  about  no  change  in  methods  of  production. 
It  is  not  possible,  and  hardly  necessary,  to  carry  the 
inquiry  much  further.  Detailed  accounts  cannot  be  ob- 
tained of  other  industries  to  which  protection  was  ap- 
plied ;  but  so  far  as  can  be  seen,  the  same  course  of 

60 


CONCLUDING  REMARKS.  6 1 

events  took  place  in  them  as  in  the  three  whose  history 
we  have  followed.  The  same  general  conditions  affected 
the  manufactures  of  glass,  earthenware,  paper,  cotton- 
bagging,  sail-duck,  cordage,  and  other  articles  to  which 
protection  was  applied  during  this  time  with  more  or  less 
vigor.  We  may  assume  that  the  same  general  effect,  or 
absence  of  effect,  followed  in  these  as  in  the  other  cases. 
It  is  not  intended  to  speak  of  the  production  of  agricul- 
tural commodities  like  sugar,  wool,  hemp,  and  flax,  to 
which  also  protection  was  applied.  In  the  production  of 
these  the  natural  advantages  of  one  country  over  another 
tell  more  decidedly  and  surely  than  in  the  case  of  most 
manufactures,  and  it  has  not  often  been  supposed  that 
they  come  within  the  scope  of  the  argument  we  are  con- 
sidering. 

Although,  therefore,  the  conditions  existed  under 
which  it  is  most  likely  that  protection  to  young  indus- 
tries may  be  advantageously  applied — a  young  and  unde- 
veloped country  in  a  stage  of  transition  from  a  purely 
agricultural  to  a  more  diversified  industrial  condition  ;  this 
transition,  moreover,  coinciding  in  time  with  great 
changes  in  the  arts,  which  made  the  establishment  of  new 
industries  peculiarly  difficult — notwithstanding  the  pres- 
ence of  these  conditions,  little,  if  any  thing,  was  gained  by  | 
the  protection  which  the  United  States  maintained  in  the  [ 
first  part  of  this  century.  Two  causes  account  for  this. 
On  thejxae_hand,  the  character  of  the  people  rendered 
the  transition  of  productive  forces  to  manufactures  com- 


62  PROTECTION  TO   YOUNG  INDUSTRIES. 

paratively  easy;  on  the  other  hand,  the  shock  to  eco- 
nomic habits  during  the  restrictive  period  from  1808  to 
1815  effectually  prepared  the  way  for  such  a  transition. 
The  genius  of  the  people  for  mechanical  arts  showed  it- 
self early.  Naturally  it  appeared  with  most  striking  re- 
sults in  those  fields  in  which  the  circumstances  of  the 
country  gave  the  richest  opportunities ;  as  in  the  applica- 
tion of  steam-power  to  navigation,  in  the  invention  and 
improvement  of  tools,  and  especially  of  agricultural  im- 
plements, and  in  the  cotton  manufacture.  The  ingenuity 
and  inventiveness  of  American  mechanics  have  become 
traditional,  and  the  names  of  Whitney  and  Fulton  need 
only  be  mentioned  to  show  that  these  qualities  were  not 
lacking  at  the  time  we  are  considering.  The  presence  of 
such  men  rendered  it  more  easy  to  remove  the  obstacles 
arising  from  want  of  skill  and  experience  in  manufactures. 
The  political  institutions,  the  high  average  of  intelligence, 
the  habitual  freedom  of  movement  from  place  to  place 
and  from  occupation  to  occupation,  also  made  the  rise  of 
the  existing  system  of  manufacturing  production  at  once 
more  easy  and  less  dangerous  than  the  same  change  in 
other  countries.  At  the  same  time  it  so  happened  that 
the  embargo,  the  non-intercourse  acts,  and  the  war  of 
1812  rudely  shook  the  country  out  of  the  grooves  in 
which  it  was  running,  and  brought  about  a  state  of  confu- 
sion from  which  the  new  industrial  system  could  emerge 
more  easily  than  from  a  well-settled  organization  of  indus- 
try. The  restrictive  period  may  indeed  be  considered  to 


CONCLUDING  REMARKS.  63 

have  been  one  of  extreme  protection.  The  stimulus 
which  it  gave  to  some  manufactures  perhaps  shows  that 
the  first  steps  in  these  were  not  taken  without  some  artifi- 
cial help.  The  intrinsic  soundness  of  the  argument  for 
protection  to  young  industries  therefore  may  not  be 
touched  by  the  conclusions  drawn  from  the  history  of  its 
trial  in  the  United  States,  which  shows  only  that  the  in- 
tentional protection  of  the  tariffs  of  1816,  1824,  and  1828 
had  little  effect.  The  period  from  1808  till  the  financial 
crisis  of  1818-19  was  a  disturbed  and  chaotic  one,  from 
which  the  country  settled  down,  with  little  assistance  from 
protective  legislation,  into  a  new  arrangement  of  its  pro- 
ductive forces. 

The  system  of  protective  legislation  began  in  1816,  and 
was  maintained  till  toward  the  end  of  the  decade  1830-40. 
The  Compromise  Act  of  1833  gradually  undermined  it. 
By  1842  duties  reached  a  lower  point  than  that  from  which 
they  had  started  in  1816.  During  this  whole  period  the 
argument  for  protection  to  young  industries  had  been  es- 
sentially the  mainstay  of  the  advocates  of  protection,  and 
the  eventual  cheapness  of  the  goods  was  the  chief  advan- 
tage which  they  proposed  to  obtain.  It  goes  without 
saying  that  this  was  not  the  only  argument  used,  and  that 
it  was  often  expressed  loosely  in  connection  with  other 
arguments.  One  does  not  find  in  the  popular  discussions 
of  fifty  years  ago,  more  than  in  those  of  the  present, 
precision  of  thought  or  expression.  The  "home  market  'V 
argument,  which,  though  essentially  distinct  from  that  for 


64  PROTECTION  TO  YOUNG  INDUSTRIES. 

young  industries,  naturally  suggests  itself  in  connection 
with  the  latter,  was  much  urged  during  the  period  we  are 
considering.  The  events  of  the  War  of  1812  had  vividly 
impressed  on  the  minds  of  the  people  the  possible  incon- 
venience, in  case  of  war,  of  depending  on  foreign  trade 
for  the  supply  of  articles  of  common  use ;  this  point  also 
was  much  urged  by  the  protectionists.  Similarly  the 
want  of  reciprocity,  and  the  possibility  of  securing,  by  re- 
taliation, a  relaxation  of  the  restrictive  legislation  of  for- 
eign countries,  were  often  mentioned.  But  any  one  who 
is  familiar  with  the  protective  literature  of  that  day, — as 
illustrated,  for  instance,  in  the  columns  of  u  Niles's  Regis- 
ter,"— cannot  fail  to  note  the  prominent  place  held  by  the 
young-industries  argument.  The  form  in  which  it  most 
commonly  appears  is  in  the  assertion  that  protection  norm- 
ally causes  the  prices  of  the  protected  articles  to  fall, '  an 
assertion  which  was  supposed,  then  as  now,  to  be  suffi- 
ciently supported  by  the  general  tendency  toward  a  fall  in 
the  price  of  manufactured  articles,  consequent  on  the  great 
improvement  in  the  methods  of  producing  such  articles. 

Shortly  after  1832,  the  movement  in  favor  of  protec- 
tion, which  had  had  full  sway  in  the  Northern  States  since 
1820,  began  to  lose  strength.  The  young-industries 

1  See,  for  instance,  the  temperate  report  of  J.  Q.  Adams,  in  1832,  in 
which  this  is  discussed  as  the  chief  argument  of  the  protectionists.  Adams, 
though  himself  a  protectionist,  refutes  it,  and  bases  his  faith  in  protection 
chiefly  on  the  loss  and  inconvenience  suffered  through  the  interruption  of 
foreign  trade  in  time  of  war.  The  report  is  in  "  Reports  of  Committees, 
22d  Congress,  ist  Session,  vol.  V.,  No.  481. 


CONCLUDING  REMARKS.  65 

argument  at  the  same  time  began  to  be  less  steadily*/ 
pressed.  About  1840  the  protective  controversy  took  a 
new  turn.  It  seems  to  have  beenv  felt  by  this  time  that 
manufactures  had  ceased  to  be  young  industries,  and  that 
the  argument  for  their  protection  as  such,  was  no  longer 
conclusive.  Another  position  was  taken.  The  argument  ' 
was  advanced  that  American  labor  should  be  protected  , 
from  the  competition  of  less  highly  paid  foreign  labor,  j 
The  labor  argument  had  hardly  been  heard  in  the  period 
which  has  been  treated  in  the  preceding  pages.  Indeed, 
the  difference  between  the  rate  of  wages  in  the  United 
States  and  in  Europe,  had  furnished,  during  the  early 
period,  an  argument  for  the  free-traders,  and  not  for  the  • 
protectionists.  The  free-traders  were  then  accustomed  to 
point  to  the  higher  wages  of  labor  in  the  United  States 
as  an  insuperable  obstacle  to  the  successful  establish- 
ment of  manufactures.  They  used  the  wages  argument 
as  a  foil  to  the  young-industries  argument,  asserting  that 
as  long  as  wages  were  so  much  lower  in  Europe,  manufac- 
turers would  not  be  able  to  maintain  themselves  without 
aid  from  the  government.  The  protectionists,  on  the 
other  hand,  felt  called  on  to  explain  away  the  difference 
of  wages ;  they  endeavored  to  show  that  this  difference 
was  not  so  great  as  was  commonly  supposed,  and  that,  so 
far  as  it  existed,  it  afforded  no  good  reason  against  adopt- 
ing protection.1  About  1840,  the  positions  of  the  con- 

'See,  among  others,  Clay's  Tariff  Speech  of  1824,  "Works,"  I.,   465. 
466. 


66  PROTECTION  TO  YOUNG  INDUSTRIES. 

tending  parties  began  to  change.1  The  protectionists  be- 
gan  to  take  the  offensive  on  the  labor  question :  the  free- 
traders were  forced  to  the  defensive  on  this  point.  The 
protectionists  asserted  that  high  duties  were  necessary  to 
shut  out  the  competition  of  the  ill-paid  laborers  of  Eu- 
rope, and  to  maintain  the  high  wages  of  the  laborers  of  the 
United  States.  Their  opponents  had  to  explain  and  de- 
fend on  the  wages  question.  Obviously  this  change  in  the 
line  of  argument  indicates  a  change  in  the  industrial  situa- 
tion. Such  an  argument  in  favor  of  protection  could  not 
have  arisen  at  a  time  when  protective  duties  existed  but  in 
small  degree,  and  when  wages  nevertheless  were  high.  Its 
use  implies  the  existence  of  industries  which  are  supposed 
to  be  dependent  on  high  duties.  When  the  protective 
system  had  been  in  force  for  some  time,  and  a  body  of  in- 
dustries had  sprung  up  which  were  thought  to  be  able  to 

1  Same  signs  of  the  appeal  for  the  benefit  of  labor  appear  as  early  as  1831 
in  a  passage  in  Gallatin's  "  Memorial/'  p.  31,  and  again  in  a  speech  of  Web- 
ster's  in  1833,  "Works,"  I.,  283.  In  the  campaign  of  1840,  little  was 
heard  of  it,  doubtless  because  other  issues  than  protection  were  in  the 
foreground.  Yet  Calhoun  was  led  to  make  a  keen  answer  to  it  in  a  speech 
of  1840,  "  Works,"  III.,  434.  In  the  debates  on  the  tariff  act  of  1842,  we 
hear  more  of  it ;  see  the  speeches  of  Choate  and  Buchanan,  Congr.  Globe, 
1841-42,  pp.  950,  953,  and  Calhoun's  allusion  to  Choate,  in  Calhoun's 
"Works,"  IV.,  207.  In  1846  the  argument  appeared  full-fledged,  in  the 
speeches  of  Winthrop,  Davis,  and  others,  Congr.  Globe,  1846,  Appendix, 
pp.,  967,  973,  1114.  See  also  a  characteristic  letter  in  Niles7  vol.  62,  p. 
262.  Webster's  speech  in  1846,  '  Works,"  V.,  231,  had  much  about  pro- 
tection and  labor,  but  in  a  form  somewhat  different  from  that  of  the  argu- 
ment we  are  nowadays  familiar  with.  See  also  the  monograph  by  G.  B. 
Mangold,  "  The  Labor  Argument  in  the  American  Protective  Tariff 
Discussion,"  Bulletin  of  the  University  of  Wisconsin,  No.  246  (1908). 


CONCLUDING  REMARKS.  6? 

pay  current  wages  only  if  aided  by  high  duties,  the  wages 
argument  naturally  suggested  itself.  The  fact  that  the 
iron  manufacture,  which  had  hitherto  played  no  great 
part  in  the  protective  controversy,  became,  after  1840, 
the  most  prominent  applicant  for  aid,  accounts  in  large 
part  for  the  new  aspect  of  the  controversy.  The  use 
of  the  wages  argument,  and  the  rise  of  the  economic 
school  of  Henry  C.  Carey,  show  that  the  argument  for 
young  industries  was  felt  to  be  no  longer  sufficient  to  be 
the  mainstay  of  the  protective  system.  The  economic 
situation  had  changed,  and  the  discussion  of  the  tariff 
underwent  a  corresponding  change. 


CHAPTER  II. 

THE  EARLY  PROTECTIVE  MOVEMENT 
AND  THE  TARIFF  OF  1828. 


IN  the  present  essay  we  shall  consider,  not  so  much  the 
economic  effect  of  the  tariff,  as  the  character  of  the  early 
protective  movement  and  its  effect  on  political  events 
and  on  legislation. 

The  protective  movement  in  this  country  has  been  said 
to  date  from  the  year  1789,  even  from  before  1789  ;  and 
more  frequently  it  has  been  said  to  begin  with  the  tariff 
act  of  1816.  But  whatever  may  have  been,  in  earlier  years, 
the  utterances  of  individual  public  men,  or  the  occasional 
drift  of  an  uncertain  public  opinion,  no  strong  popular 
movement  for  protection  can  be  traced  before  the  crisis 
of  1818-19.  The  act  of  1816,  which  is  generally  said  to 
mark  the  beginning  of  a  distinctly  protective  policy  in 
this  country,  belongs  rather  to  the  earlier  series  of  acts, 
beginning  with  that  of  1789,  than  to  the  group  of  acts  of 
1824,  1828,  and  1832.  Its  highest  permanent  rate  of  duty 
was  twenty  per  cent.,  an  increase  over  the  previous  rates 
which  is  chiefly  accounted  for  by  the  heavy  interest  charge 
on  the  debt  incurred  during  the  war.  But  after  the  crash 
of  1819,  a  movement  in  favor  of  protection  set  in,  which 

68 


THE  EARLY  PROTECTIVE  MOVEMENT.  69 

was  backed  by  a  strong  popular  feeling  such  as  had  been 
absent  in  the  earlier  years.  The  causes  of  the  new  move- 
ment are  not  far  to  seek.  On  the  one  hand  there  was  a 

f' '  > 
great  collapse  in  the  prices   of  land   and  of  agricultural 

products,  which  had  been  much  inflated  during  the  years 
from  1815  to  1818.  At  the  same  time  the  foreign  market 
for  grain  and  provisions,  which  had  been  highly  profitable 
during  the  time  of  the  Napoleonic  wars,  and  which  there 
had  been  a  spasmodic  attempt  to  regain  for  two  or  three 
years  after  the  close  of  our  war  in  1815,  was  almost  entirely 
lost.  On  the  other  hand,  a  large  number  of  manufacturing 
industries  had  grown  up,  still  in  the  early  stages  of  growth, 
and  still  beset  with  difficulties,  yet  likely  in  the  end  to 
hold  their  own  and  to  prosper.  That  disposition  to  seek 
a  remedy  from  legislation,  which  always  shows  itself  after 
an  industrial  crisis,  now  led  the  farmers  to  ask  for  a  home 
market,  while  the  manufacturers  wanted  protection  for 
young  industries.  The  distress  that  followed  the  crisis 
brought  out  a  plentiful  crop  of  pamphlets  in  favor  of  pro- 
tection, of  societies  and  conventions  for  the  promotion  of 
domestic  industry,  of  petitions  and  memorials  to  Congress 
for  higher  duties.  The  movement  undoubtedly  had  deep 
root  in  the  feelings  and  convictions  of  the  people,  and  the 
powerful  hold  which  protective  ideas  then  obtained  influ- 
enced the  policy  of  the  nation  long  after  the  immediate 
effects  of  the  crisis  had  ceased  to  be  felt.1 

1  The  character  of  the  protective  movement  after  1819  is  best  illustrated 
by  the  numerous  pamphlets  of  Matthew  Gary.     See  especially  the  "  Appeal 


THE  EARLY  PROTECTIVE  MOVEMENT. 

The  first  effect  of  this  movement  was  seen  in  a  series 
of  measures  which  were  proposed  and  earnestly  pushed 
in  Congress  in  the  session  of  1819-20.  They  included  a 
bill  for  a  general  increase  of  duties,  one  for  shortening 
credits  on  duties,  and  one  for  taxing  sales  by  auction  of 
imported  goods.  The  first  of  these  very  nearly  took  an 
important  place  in  our  history,  for  it  was  passed  by  the 
House,  and  failed  to  pass  the  Senate  by  but  a  single  vote. 
Although  it  did  not  become  law,  the  protective  movement 
which  was  expressed  in  the  votes  and  speeches  on  it  re. 
mained  unchanged  for  several  years,  and  brought  about 
the  act  of  1824,  while  making  possible  the  act  of  1828. 
Some  understanding  of  the  state  of  feeling  in  the  differ- 
ent sections  of  the  country  is  necessary  before  the  peculiar 
events  of  1828  can  be  made  clear,  and  it  may  be  conven- 
iently reached  at  this  point. 

The  stronghold  of  the  protective  movement  was  in  the 
^Middle  and  Western  states  of  those  days — in  New  York, 
New  Jersey,  Pennsylvania,  Ohio,  and  Kentucky.  They 
were  the  great  agricultural  States  ;  they  felt  most  keenly 
the  loss  of  the  foreign  market  of  the  early  years  of  the 
century,  and  were  appealed  to  most  directly  by  the  cry  for  a 
home  market.  At  the  same  time  they  had  been  most  deep- 
ly involved  in  the  inflation  of  the  years  1816-19,  and  were 
in  that  condition  of  general  distress  and  confusion  which 

to  Common  Sense  and  Common  Justice  "  (1822)  and  "  The  Crisis  :  A  Sol- 
emn Appeal,"  etc.  (1823).  "  Niles's  Register,"  which  had  said  little  about 
tariff  before  1819,  thereafter  became  a  tireless  and  effective  advocate  of 
protection. 


THE  EARLY  PROTECTIVE  MOVEMENT.  7 1 

leads  people  to  look  for  some  panacea.  The  idea  of  pro- 
tection as  a  cure  for  their  troubles  had  obtained  a  strong 
hold  on  their  minds.  It  is  not  surprising,  when  we  consider 
the  impetuous  character  of  the  element  in  American  democ- 
racy at  that  time  represented  by  them,  that  the  idea  was 
applied  in  a  sweeping  and  indiscriminate  manner.  They 
wanted  protection  not  only  for  the  manufactures  that 
were  to  bring  them  a  home  market,  but  for  many  of  their 
own  products,  such  as  wool,  hemp,  flax,  even  for  wheat 
and  corn.  For  the  two  last  mentioned  they  asked  aid 
more  particularly  in  the  form  of  higher  duties  on  rum 
and  brandy,  which  were  supposed  to  compete  with  spirits 
distilled  from  home-grown  grain.  A  duty  on  molasses 
was  a  natural  supplement  to  that  on  rum.  Iron  was  al- 
ready produced  to  a  considerable  extent  in  Pennsylvania 
and  New  Jersey,  and  for  that  also  protection  was  asked. 

In  New  England  there  was  a  strong  opposition  to 
of  these  demands.  The  business  community  of 
England  was  still  made  up  mainly  of  importers, 
ers  in  foreign  goods,  shipping  merchants,  and  vessel- 
owners,  who  naturally  looked  with  aversion  at  measures 
that  tended  to  lessen  the  volume  of  foreign  trade.  More- 
over, they  had  special  objections  to  many  of  the  duties 
asked  for  by  the  agricultural  states.  Hemp  in  the 
form  of  cordage,  flax  in  the  form  of  sail  duck,  and  iron, 
were  important  items  in  the  cost  of  building  and  equip- 
ping ships.  The  duties  on  molasses  and  rum  were  aimed  at 
an  industry  carried  on  almost  exclusively  in  New  England  : 


THE  EARLY  PROTECTIVE  MOVEMENT. 

the  importation  of  molasses  from  the  West  Indies  in  ex- 
change for  fish,  provisions,  and  lumber,  and  its  subsequent 
manufacture  into  rum.  Wool  was  the  raw  material  of  a 
rapidly  growing  manufacture.  So  far  the  circumstances 
led  to  opposition  to  the  protective  movement.  On  the 
other  hand,  the  manufacture  of  cotton  and  woollen  goods 
was  increasing  rapidly  and  steadily,  and  was  the  moving 
force  of  a  current  in  favor  of  protection  that  became 
stronger  year  by  year.  We  have  seen  that  the  beginning 
vo'f  New  England's  manufacturing  career  dates  back  to  the 
War  of  1812.  Before  1820  she  was  fairly  launched  on  it, 
and  between  1820  and  1830  she  made  enormous  advances. 
The  manufacturers  carried  on  a  conflict,  unequal  at  first, 
but  rapidly  becoming  less  unequal,  with  the  merchants 
and  ship-owners.  As  early  as  1820  Connecticut  and 
Rhode  Island  were  pretty  firmly  protective ;  but  Massa- 
chusetts hesitated.  Under  the  first  weight  of  the  crisis  of 
1819,  the  protective  feeling  was  strong  enough  to  cause  a 
majority  of  her  congressmen  to  vote  for  the  bill  of  1820. 
But  there  was  great  opposition  to  that  bill,  and  after  1820 
the  protective  feeling  died  down.1  In  1824  Massachusetts 
was  still  disinclined  to  adopt  the  protective  system,  and  it 
was  not  until  the  end  of  the  decade  that  she  came 

1  The  vote  on  the  bill  of  1820,  by  States,  is  given  in  Niles,  XVIII., 
169.  Of  the  Massachusetts  members  19  voted  yes,  6  no,  and  4  were  ab- 
sent. Of  the  New  England  members  19  voted  yes,  9  no,  and  9  were  ab- 
sent. The  opposition  to  the  bill  in  Massachusetts  was  the  occasion  of  a 
meeting  at  which  Webster  made  his  first  speech  on  tariff,  which  is  not  re- 
printed in  his  works,  but  may  be  found  in  the  newspapers  of  the  day. 


THE  EARLY  PROTECTIVE  MOVEMENT.  73 

squarely  in  line  with  the  agricultural  states  on  that  sub- 
ject. 

The  South  took  its  stand  against  the  protective  system, 
with  a  promptness  and  decision  'characteristic  of  the  po- 
litical history  of  the  slave  states.  The  opposition  of  the 
Southern  members  to  the  tariff  bill  of  1820  is  significant 
of  the  change  in  the  nature  of  the  protective  movement 
between  1816  and  1820.  The  Southern  leaders  had  advo- 
cated the  passage  of  the  act  of  1816,  but  they  bitterly  op- 
posed the  bill  of  1820.  It  is  possible  that  the  Missouri 
Compromise  struggle  had  opened  their  eyes  to  the  con- 
nection between  slavery  and  free  trade.1  At  all  events, 
they  had  grasped  the  fact  that  slavery  made  the  growth  of 
manufactures  in  the  South  impossible,  that  manufactured 
goods  must  be  bought  in  Europe  or  in  the  North,  and 
that,  wherever  bought,  a  protective  tariff  would  tend  to 
make  them  dearer.  Moreover,  Cotton  was  not  yet  King, 
and  the  South  was  not  sure  that  its  staple  was  indispensa- 
ble for  all  the  world.  While  the  export  of  cotton  on  a 
large  scale  had  begun,  it  was  feared  that  England,  in  re- 
taliation for  high  duties  on  English  goods,  might  tax  or 
exclude  American  cotton. 

Such  was  in  1820  the  feeling  in  regard  to  the  protective 
system  in  the  different  parts  of  the  country.  After  the 
failure  of  the  bill  of  that  year,  the  movement  for  higher 
duties  seems  for  a  while  to  have  lost  headway.  The  low- 

1  But  no  reference  was  made  to  the  Missouri  struggle  in  the  debates  on 
the  tariff  bill  of  1820. 


V74 


THE  EARLY  PROTECTIVE  MOVEMENT. 


est  point  of  industrial  and  commercial  depression,  so  far 
as  indicated  by  the  revenue,  was  reached  at  the  close  of 
1820,  and,  as  affairs  began  to  mend,  protective  measures 
received  less  vigorous  support.  Bills  to  increase  duties, 
similar  to  the  bill  of  1820,  were  introduced  in  Congress  in 
1821  and  1822,  but  they  were  not  pressed  and  led  to  no 
legislation.1 

Public  opinion  in  most  of  the  Northern  States,  how- 
ever, continued  to  favor  protection ;  the  more  so  because, 
after  the  first  shock  of  the' crisis  of  1819  was  over,  recov- 
ery, though  steady,  was  slow.  As  a  Presidential  election 
approached  and  caused  public  men  to  respond  more 
readily  to  popular  feeling,  the  protectionists  gained  a  de- 
cided victory,  (JPhe  tariff  of  1824  was  passed,  the  first  and 
the  most  direct  fruit  of  the  early  protective  movement. 
The  Presidential  election  of  that  year  undoubtedly  had  an 
effect  in  causing  its  passage  ;  but  the  influence  of  politics 
and  political  ambition  was  in  this  case  hardly  a  harmful 
one.  Not  only  Clay,  the  sponsor  of  the  American  System, 
but  Adams,  Crawford,  and  Jackson  were  declared  advo- 
cates of  protection.  Party  lines,  so  far  as  they  existed  at 
all,  were  not  regarded  in  the  vote  on  the  tariff.  It  was 
|carried  mainly  by  the  votes  of  the  Western  and  Middle 

1  See  the  interesting  account  of  a  Cabinet  meeting  in  November,  1821. 
in  "  J.  Q.  Adams's  Memoirs,"  vol.  V.,  pp.  408-411.  "  The  lowest  point  of 
the  depression  was  reached  at  the  close  of  last  year"  [1820].  Calhoun 
thought  "  the  prosperity  of  the  manufacturers  was  now  so  clearly  estab- 
lished that  it  might  be  mentioned  in  the  message  as  a  subject  for  congratu- 
lation." Crawford  said  "  there  would  not  be  much  trouble  in  the  ensuing 
session  with  the  manufacturing  interest,"  and  Adams  himself  "  had  no  ap- 
prehension that  there  would  be  much  debate  on  manufacturing  interests." 


THE  EARLY  PROTECTIVE  MOVEMENT.  75 

states.  The  South  was  in  opposition,  New  England  was 
divided  ;  Rhode  Island  and  Connecticut  voted  for  the  bill, 
Massachusetts  and  the  other  Nexw  England  states  were 
decidedly  opposed.1 

The  opposition  of  Massachusetts  was  the  natural  result 
of  the  character  of  the  new  tariff.  The  most  important 
changes  made  by  it  were  in  the  increased  duties  on  iron, 
lead,  wool,  hemp,  cotton-bagging,  and  other  articles  whose 
protection  was  desired  chiefly  by  the  Middle  and  Western 
States.  The  duties  on  textile  fabrics,  it  is  true,  were  also 
raised.  Those  on  cotton  and  woollen  goods  went  up  from 
25  to  33 \  per  cent.  This  increase,  however,  was  offset,  so 
far  as  woollens  were  concerned,  by  the  imposition  of  a 
duty  of  30  per  cent,  on  wool,  which  had  before  been  ad- 
mitted at  15  per  cent.  The  manufacturers  of  woollen 
goods  were,  therefore,  as  far  as  the  tariff  was  concerned, 
in  about  the  same  position  as  before.2  The  heavier  duties 

1  John  Randolph  said,  in  his  vigorous  fashion,. of  the  tariff  bill  of  1824  : 
' '  The  merchants  and  manufacturers  of  Massachusetts  and  New  Hampshire 
repel  this  bill,  while  men  in  hunting  shirts,  with  deerskin  leggings  and 
moccasins  on  their  feet,  want  protection  for  home  manufactures." — "  De- 
bates of  Congress,  1824,  p.  2370. 

8  This  can  be  shown  very  easily.  The  cost  of  the  wool  is  about  one  hall 
the  cost  of  making  woollen  goods.  Then  we  have  in  1816  : 

Duty  on  woollens         ....         25  per  cent. 
Deduct  duty  on  wool,  \  of  15  cent.           .     7^         " 
Net  protection  in  1816     ....     "17$         " 
And  in  1824  we  have : 

Duty  on  woollens 33^  per  cent. 

Deduct  duty  on  wool,  \  of  30  per  cent.     .15          " 
Net  protection  in  1824         .         .         .         i8£         " 

i  ne  rise  in  duties  both  on  wool  and  on  woollens  took  place  gradually  by 
the  terms  of  the  act  of  1824.  The  calculation  is  based  on  the  final  rates, 
which  were  reached  in  18261^ 


THE  EAJRLY  PROTECTIVE  MOVEMENT. 

on  iron  and  hemp,  on  the  other  hand,  were  injurious  to  the 
ship-builders. 

The  manufacture  of  textiles  was  rapidly  extending  in 
all  the  New  England  States.  At  first  that  of  cottons  re- 
ceived most  attention,  and  played  the  most  important 
part  in  the  protective  controversy.  But  by  1824  the 
cotton  industry  was  firmly  established  and  almost  inde- 
pendent of  support  by  duties.  The  woollen  manufacture 
was  in  a  less  firm  position,  and  in  1824  became  the  promi- 
nent candidate  for  protection.  Between  1824  and  1828  a 
strong  movement  set  in  for  higher  duties  on  woollens, 
which  led  eventually  to  some  of  the  most  striking  features 
of  the  tariff  act  of  1828. 

The  duties  proposed  and  finally  established  on  wool- 
lens were  modelled  on  the  minimum  duty  of  1816  on 
cottons.  By  the  tariff  act  of  that  year,  it  will  be  remem- 
bered, cotton  goods  were  made  subject  to  a  general  ad 
valorem  duty  of  25  per  cent. ;  but  it  was  further  provided 
that  "  all  cotton  cloths,  whose  value  shall  be  less  than  25 
cents  per  square  yard,  shall  be  taken  and  deemed  to  have 
cost  25  cents  per  square  yard,  and  shall  be  charged  with 
duty  accordingly."  That  is,  a  specific  duty  of  six  and  n 
quarter  cents  a  square  yard  was  imposed  on  all  cotton 
cloths  costing  twenty-five  cents  a  square  yard  or  less.  The 
minimum  duties,  originally  intended  to  affect  chiefly  East 
Indian  goods  and  goods  made  from  East  Indian  cotton, 
had  an  effect  in  practice  mainly  on  goods  from  England, 
whether  made  of  American  or  of  Indian  cotton.  In  a  few 


THE  EARLY  PROTECTIVE  MOVEMENT.  77 

years,  as  the  use  of  the  power  loom  and  other  improve- 
ments in  manufacture  brought  the  price  of  coarse  cottons 
much  below  twenty-five  cents,  the  minimum  duties  be- 
came prohibitory.  How  far  they  were  needed  in  order  to 
promote  the  success  and  prosperity  of  the  cotton  manu- 
facture in  years  following  their  imposition,  we  have 
already  discussed.1  At  all  events,  whether  or  not  in 
consequence  of  the  duties,  large  profits  were  made  by 
those  who  entered  on  it,  and  in  a  few  years  the  cheaper 
grades  of  cotton  cloth  were  produced  so  cheaply,  and  of 
such  good  quality,  that  the  manufacturers  freely  asserted 
that  the  duty  had  become  nominal,  and  that  foreign  com- 
petition no  longer  was  feared. 

This  example  had  its  effect  on  the  manufacturers  of 
woollen  goods,  and  on  the  advocates  of  protection  in  gen- 
eral. In  the  tariff  bill  of  1820,  minimum  duties  on  linen 
and  on  other  goods  had  been  proposed.  In  1824  an  ear- 
nest effort  was  made  to  extend  the  minimum  system  to 
woollens.  The  committee  which  reported  the  tariff  bill 
of  that  year  recommended  the  adoption  in  regard  to 
woollens  of  a  proviso  framed  after  that  of  the  tariff  of 
1816  in  regard  to  cottons,  the  minimum  valuation  being 
eighty  cents  a  yard.  The  House  first  lowered  the  valua- 
tion to  forty  cents  and  finally  struck  out  the  whole  proviso 
by  a  scant  majority  of  three  votes.2  There  was  one  great 
obstacle  in  the  way  of  a  high  duty  on  cheap  woollen 

1  See  above,  pp.  25-36. 

2  The  vote  was  104  to  101.     "  Annals  of  Congress,  '  1823-24,  p.  2310. 


THE   EARLY  PROTECTIVE  MOVEMENT. 

goods :  they  were  imported  largely  for  the  use  of  slaves 
on  Southern  plantations.  Tender  treatment  of  the  pecul- 
iar institution  had  already  begun,  and  there  was  strong 
opposition  to  a  duty  which  had  the  appearance  of  being 
aimed  against  the  slave-holders.  The  application  of  the 
minimum  principle  to  other  than  cheap  woollen  goods 
apparently  had  not  yet  been  thought  of;  but  the  idea  was 
obvious,  and  soon  was  brought  forward.  * 

After  1824  there  was  another  lull  in  the  agitation  for 
protection.  Trade  was  buoyant  in  1825,  and  production 
profitable.  For  the  first  time  since  1818  there  was  a 
swing  in  business  operations.  This  seems  to  have  been 
particularly  the  case  with  the  woollen  manufacturers. 
During  the  years  from  1815  to  1818-19,  they,  like  other 
manufacturers,  had  met  with  great  difficulties ;  and  when 
the  first  shock  of  the  crisis  of  the  latter  year  was  over, 
matters  began  to  mend  but  slowly.  About  1824,  however, 
according  to  the  accounts  both  of  their  friends  and  of 
their  opponents  on  the  tariff  question,  they  extended 
their  operations  largely.1  It  is  clear  that  this  expansion, 
such  as  it  was,  was  not  the  effect  of  any  stimulus  given  by 
the  tariff  of  1824,  for,  as  we  have  seen,  the  encouragement 
given  the  woollen  manufacturers  by  that  act  was  no 
greater  than  had  been  given  under  the  act  of  1816.  At 
all  events,  the  upward  movement  lasted  but  a  short  time. 

'  See  the  Report  of  the  Harrisburg  Convention  of  1827  in  Niles, 
XXXIII.,  109;  Tibbits,  "Essay  on  Home  Market"  (1827),  pp.  26,  27; 
Henry  Lee,  "  Boston  Report  of  1827,"  pp.  64  seq. 


THE  EARLY  PROTECTIVE  MOVEMENT.  79 

In  England  a  similar  movement  had  been  carried  to  the 
extreme  of  speculation  and  had  resulted  in  the  crisis  of 
1825-26.  From  England  the  panic  was  communicated  to 
the  United  States  ;  but,  as  the  speculative  movement  had 
not  been  carried  so  far  in  this  country,  the  revulsion  was 
less  severely  felt.  It  seems,  however,  to  have  fallen  on 
the  woollen  manufacturers  with  peculiar  weight.  Parlia- 
ment, it  so  happened,  in  1824  had  abolished  almost  en- 
tirely the  duty  on  wool  imported  into  England.  It  went 
down  from  twelve  pence  to  one  penny  a  pound.1  The 
imports  of  woollen  goods  into  the  United  States  had  in 
1825  been  unusually  large  ;  the  markets  were  well  stocked  ; 
the  English  manufacturers  were  at  once  enabled  to  sell 
cheaply  by  the  lower  price  of  their  raw  material,  and 
pushed  to  do  so  by  the  depression  of  trade. 

A  vigorous  effort  was  now  made  to  secure  legislative 
aid  to  the  woollen  makers,  similar  to  that  given  the  cotton 
manufacturers.  Massachusetts  was  the  chief  seat  of  the 
woollen  industry.  The  woollen  manufacturers  held  meet- 
ings in  Boston  and  united  for  common  action,  and  it  was 
determined  to  ask  Congress  to  extend  the  minimum  sys- 

1  It  is  sometimes  said  that  this  reduction  of  the  wool  duty  in  England 
was  undertaken  with  the  express  purpose  of  counteracting  the  protective 
duties  imposed  on  woollens  in  the  United  States.  But  there  is  little  ground 
for  supposing  that  our  duties  were  watched  so  vigilantly  in  England,  or 
were  the  chief  occasion  for  English  legislation.  The  agitation  for  getting 
rid  of  the  restriction  on  the  import  and  export  of  wool  began  as  early  a:; 
1819,  and  during  its  course  very  little  reference,  if  any,  was  made  to  the 
American  duties.  See  the  sketch  in  Bisehoffs  "  History  of  the  Woollen 
and  Worsted  Manufactures,"  vol.  II  chapters  I  and  2. 


'80  THE  EARLY  PROTECTIVE  MOVEMENT. 

tern  to  woollen  goods.1  The  legislature  of  the  State 
passed  resolutions  asking  for  further  protection  for  wool- 
lens, and  these  resolutions  were  presented  in  the  federal 
House  of  Representatives  by  Webster.2  A  deputation  of 
manufacturers  was  sent  to  Washington  to  present  the 
case  to  the  committee  on  manufactures.  Their  efforts 
promised  to  be  successful.  When  Congress  met  for  the 
session  of  1826-27,  the  committee  (which  in  those  days 
had  charge  of  tariff  legislation)  reported  a  bill  which  gave 
the  manufacturers  all  they  asked  for. 

This  measure  contained  the  provisions  which,  when 
finally  put  in  force  in  the  tariff  of  1828,  became  the  object 
of  the  most  violent  attack  by  the  opponents  of  protec- 
tion. It  made  no  change  in  the  nominal  rate  of  duty, 
which  was  to  remain  at  33^  per  cent.  But  minimum  val- 
uations were  added,  on  the  plan  of  the  minima  on  cottons, 
in  such  a  way  as  to  carry  the  actual  duty  far  beyond  the 
point  indicated  by  the  nominal  rate.  The  bill  provided 
that  all  goods  costing  less  than  40  cents  a  square  yard 
were  to  pay  duty  as  if  they  had  cost  40  cents ;  all  costing 
more  than  40  cents  and  less  than  $2. 50  were  to  be  charged 
as  if  they  had  cost  $2.50 ;  all  costing  between  $2.50  and 
$4.00  to  be  charged  as  if  they  had  cost  $4.00.  A  similar 

1  The  memorial  of  the  manufacturers  to  Congress  is  in  Niles,  XXXI., 
185.     It  asks  for  minimum  duties,  on  the  ground  that  ad  valorem  duties 
are  fraudulently  evaded.     For  the  circular  sent  out  by  this  committee,  see 
ibid.,  p.  200. 

2  "  American  State  Papers,  Finance,"  V.,  599;  "  Annals  of  Congress," 
1826-27,  p.  loio. 


THE  EARLY  PROTECTIVE  MOVEMENT.  8 1 

course  was  proposed  in  regard  to  raw  wool.  The  ad  valo- 
rem rate  on  raw  wool  was  to  be  30  per  cent,  in  the  first 
place,  and  to  rise  by  steps  to  40  per  cent. ;  and  it  was  to 
be  charged  on  all  wool  costing  fcetween  16  cents  and 
40  cents  a  pound  as  if  the  wool  had  cost  40  cents.  The 
effect  of  this  somewhat  complicated  machinery  was  evi- 
dently to  levy  specific  duties  both  on  wool  and  on  wool- 
lens. On  wool  the  duty  was  to  be,  eventually,  16  cents  a 
pound.  On  woollens  it  was  to  be  13^  cents  a  yard  on 
woollens  of  the  first  class,  83^  cents  on  those  of  the 
second  class,  and  $1.33^  on  those  of  the  third  class. 

The  minimum  system,  applied  in  this  way,  imposed  ad 
valorem  duties  in  form,  specific  duties  in  fact.  It  had 
some  of  the  disadvantages  of  both  systems.  It  offered 
temptations  to  fraudulent  undervaluation  stronger  than 
those  offered  by  ad  valorem  duties.  For  example,  under 
the  bill  of  1827,  the  duty  on  goods  worth  in  the  neigh- 
borhood of  40  cents  a  yard  would  be  13^  cents  if  the 
value  was  less  than  40  cents  ;  but  if  the  value  was  more 
than  40  cents,  the  duty  would  be  83^-  cents.  If  the  value 
could  be  made  to  appear  less  than  forty  cents,  the  im- 
porter saved  70  cents  a  yard  in  duties.  Similarly,  at  the 
next  step  in  the  minimum  points,  the  duty  was  83^  cents 
if  the  goods  were  worth  less  than  $2.50,  and  $1.33^  cents 
if  the  goods  were  worth  more  than  $2.50.  The  tempta- 
tion to  undervalue  was  obviously  very  strong  under  such 
a  system,  in  the  case  of  all  goods  which  could  be  brought 
with  any  plausibility  near  one  of  the  minimum  points. 


82  THE  EARLY  PROTECTIVE  MOVEMENT. 

On  the  other  hand,  the  system  had  the  want  of  elasticity 
which  goes  with  specific  duties.  All  goods  costing  be- 
tween 40  cents  and  $2.50  were  charged  with  the  same 
duty,  so  that  cheap  goods  were  taxed  at  a  higher  rate 
than  dear  goods.  The  great  gap  between  the  first  and 
second  minimum  points  (40  cents  and  $2.50)  made  this 
objection  the  stronger.  But  that  gap  was  not  the  result 
of  accident.  It  was  intended  to  bring  about  a  very  heavy 
duty  on  goods  of  the  grade  chiefly  manufactured  in  this 
country.  The  most  important  domestic  goods  were 
worth  about  a  dollar  a  yard,  and  their  makers,  under  this 
bill,  would  get  a  protective  duty  of  83^-  cents  a  yard.  The 
object  was  to  secure  a  very  high  duty,  while  retaining 
nominally  the  existing  rate  of  33^  per  cent. 

The  woollens  bill  of  1827  had  a  fate  similar  to  that  of 
the  general  tariff  bill  of  1820.  It  was  passed  in  the 
House,  but  lost  in  the  Senate  by  the  casting  vote  of  the 
Vice-President.  In  the  House  the  Massachusetts  mem- 
bers, with  one  exception,  voted  for  it,  and  both  Senators 
from  Massachusetts  supported  it.1 

This  bill  having  failed,  the  advocates  of  protection  de- 
termined to  continue  their  agitation,  and  to  give  it  wider 
scope.  A  national  convention  of  protectionists  was  de- 
termined on.2  Meetings  were  held  in  the  different  States 

1  "  Congressional  Debates,"  III.,  1099,  496. 

v  It  is  not  very  clear  in  what  quarter  the  scheme  of  holding  such  a  con- 
vention had  its  origin.  The  first  public  suggestion  came  from  the  Phila- 
delphia Society  for  the  Promotion  of  Domestic  Industry,  an  association 
founded  by  Hamilton,  of  which  Matthew  Carey  and  C.  J.  Ingersoll  were  at 
this  time  the  leading  spirits. 


THE  EARL  Y  PROTECTIVE  MO  VEMENT.  83 

in  which  the  protective  policy  was  popular,  and  delegates 
were  appointed  to  a  general  convention.  In  midsummer 
of  1827  about  a  hundred  person^  assembled  at  Harris- 
burg,  and  held  the  Harrisburg  convention,  well  known  in 
its  day.  Most  of  the  delegates  were  manufacturers,  some 
were  newspaper  editors  and  pamphleteers,  a  few  were 
politicians.1  The  convention  did  not  confine  its  attention 
to  wool  and  woollens.  It  considered  all  the  industries 
which  were  supposed  to  need  protection.  It  recom- 
mended higher  duties  for  the  aid  of  agriculture  ;  others^ 
on  manufactures  of  cotton,  hemp,  flax,  iron,  and  glass  ;/ 
and  finally,  new  duties  on  wool  and  woollens.  The  move- 
ment was  primarily  for  the  aid  of  the  woollen  industry  ; 
other  interests  were  included  in  it  as  a  means  of  gaining 
strength.  The  duties  which  were  demanded  on  woollens 
were  on  the  same  plan  as  those  proposed  in  the  bill  of 
1827,  differing  only  in  that  they  were  higher.  "^^IG.  ad  valo- 
rem rate  on  woollen  goods  was  to  be  40  per  cent,  in  the 
first  place,  and  was  to  be  raised  gradually  until  it  reached 
50  per  cent.  It  was  to  be  assessed  on  minimum  valua- 
tions of  fifty  cents,  two  dollars  and  a  half,  four  dollars, 
and  six  dollars  a  yard.  The  duty  on  wool  was  to  be 
twenty  cents  a  pound  in  the  first  instance,  and  was  to  be 
raised  each  year  by  2j  cents  until  it  should  reach  fifty 
cents  a  pound.  Needless  to  say,  the  duty  would  be  pro- 

1  Among  the  politicians  was  Mallary  of  Vermont,  who  had  been  chairman 
of  the  committee  on  manufactures  in  the  preceding  Congress,  and  became 
the  spokesman  of  the  protectionists  in  the  ensuing  session,  when  the  tariff 
of  1828  was  passed. 


V/8 


84  THE  EARLY  PROTECTIVE  MOVEMENT. 

hibitory  long  before  this  limit  was  reached.    Wool  cost- 
ing less  than  eight  cents  was  to  be  admitted  free.1 

At  this  point  a  new  factor,  which  we  may  call  "  politics," 
began  to  make  itself  felt  in  the  protective  movement. 
The  natural  pressure  of  public  opinion  on  public  men  had 
exercised  its  effect  in  previous  years,  and  had  had  its 
share  in  bringing  about  the  tariff  act  of  1824  and  the 
woollens  bill  of  1827.  But  the  gradual  crystallization  of 
two  parties,  the  Adams  and  Jackson  parties, — Whigs  and 
Democrats,  as  they  soon  came  to  be  called — put  a  new 
face  on  the  political  situation,  and  had  an  unexpected 
effect  on  tariff  legislation.  The  contest  between  them 
had  begun  in  earnest  before  the  Harrisburg  convention 
met,  and  some  of  the  Jackson  men  alleged  that  the  con- 
vention was  no  more  than  a  demonstration  got  up  by  the 
Adams  men  as  a  means  of  bringing  the  protective  move- 
ment to  bear  in  their  aid  ;  but  this  was  denied,  and  such 
evidence  as  we  have  seems  to  support  the  denial.3  Yet 

1  The  proceedings  of  the  convention,  the  address  of  the  people,  the  me- 
morial to  Congress,  etc.,  are  in  Niles,  XXXII.  and  XXXIII. 

3  I  have  been  able  to  find  little  direct  evidence  as  to  the  political  bearing 
of  the  Harrisburg  convention.  Matthew  Carey,  in  a  letter  of  July,  1827, 
while  admitting  he  is  an  Adams  man,  protests  against  "  amalgamating  the 
question  of  the  presidency  with  that  for  the  protection  of  manufactures. " 
Niles,  XXXII.,  389.  The  (New  York)  Evening  Post,  a  Jackson  paper, 
said  the  convention  was  a  manoeuvre  of  the  Adams  men  ;  see  its  issues  of 
August  i  and  August  9,  1827.  This  was  denied  in  the  National  Intelli- 
gencer (Adams)  of  July  gth,  and  also  in  the  (New  York)  American  (Adams)  of 
July  gth.  The  Evening  Post  admitted  (August  nth)  that  "  doubtless  many 
members  of  the  convention  were  innocent  of  political  views,"  and  that  "  the 
test  we»e  induced  to  postpone  or  abandon  their  political  views."  Van 
Buren  apparently  suspected  that  the  convention  might  have  a  political 


THE  EARLY  PROTECTIVE  MOVEMENT.  85 

the  Adams  men  were  undoubtedly  helped  by  the  protec- 
tive movement.  Although  there  was  not  then,  nor  for  a 
number  of  years  after,  a  clear-cut  division  on  party  lines 
between  protectionists  and  so-called  free  traders,  the 
Adams  men  were  more  firmly  and  unitedly  in  favor  of 
protection  than  their  opponents.  Adams  was  a  protec- 
tionist, though  not  an  extreme  one ;  Clay,  the  leader 
and  spokesman  of  the  party,  was  more  than  any  other 
public  man  identified  with  the  American  system.  They 
were  at  least  willing  that  the  protective  question  should 
be  brought  into  the  foreground  of  the  political  contest.1 
The  position  of  the  Jackson  men,  on  the  other  hand, 

meaning,  and  warned  its  members  against  forming  "  a  political  cabal "  ;  cf. 
the  National  Intelligencer  of  July  26th.  But  among  the  delegates  from 
New  York  were  both  Jackson  and  Adams  men.  See  Hammond,  "  Politi- 
cal History  of  New  York,"  II.,  256-258  ;  Niles,  XXXII.,  349.  Niles, 
who  was  an  active  member  of  the  convention,  denied  strenuously  that  poli- 
tics had  any  thing  to  do  with  it.  Niles,  XXXIV.,  187. — Since  the  above 
was  put  in  type,  however,  a  letter  of  Clay's  has  been  found  which  seems 
to  indicate  that  the  movement  for  holding  such  a  convention  was  at  least 
started  by  the  anti-Jackson  leaders.  The  letter  is  printed  in  the  "  Quar- 
terly Journal  of  Economics,"  vol.  II.,  July,  1888. 

1  There  is  ground  for  suspecting  that  the  Adams  party  would  have  been 
willing  to  make  the  tariff  question  the  decisive  issue  of  the  presidential 
campaign.  Clay  made  it  the  burden  of  his  speeches  during  his  journey  to 
the  West  in  the  early  summer  of  1827.  Very  soon  after  this,  however,  the 
correspondence  between  Jackson  and  Carter  Beverly  was  published,  and 
fixed  attention  on  the  "  bargain  and  corruption  "  cry.  That  was  the  point 
which  the  Jackson  managers  succeeded  in  making  most  prominent  in  the 
campaign.  Clay  dropped  the  question  of  protection  ;  he  found  enough  to 
do  in  answering  the  charge  that  in  1825  a  corrupt  bargain  had  made  Adams 
President  and  himself  Secretary  of  State.  See  Clay's  speech  at  Pittsburg, 
June  20,  1827,  in  Niles,  XXXII.,  299.  On  June  29th,  Clay  published 
his  first  denial  of  the  "bargain  and  corruption"  charges.  7K</.fp.  350, 
Cf.  Parton, "  Life  of  Jackson,"  III.,  in. 


86  THE  EARLY  PROTECTIVE  MOVEMENT. 

was  a  very  difficult  one.  Their  party  had  at  this  time  no 
settled  policy  in  regard  to  the  questions  which  were  to  be 
the  subjects  of  the  political  struggles  of  the  next  twenty 
years.  They  were  united  on  only  one  point,  a  determi- 
nation to  oust  the  other  side.  On  the  tariff,  as  well  as  on 
the  bank  and  internal  improvements,  the  various  elements 
of  the  party  held  very  different  opinions.  The  Southern 
members,  who  were  almost  to  a  man  supporters  of  Jack- 
son, were  opposed  unconditionally  not  only  to  an  increase 
of  duties,  but  to  the  high  range  which  the  tariff  had  al- 
ready reached.  They  were  convinced,  and  in  the  main 
justly  convinced,  that  the  taxes  levied  by  the  tariff  fell 
with  peculiar  weight  on  the  slave  States,  and  their  opposi- 
tion was  already  tinged  with  the  bitterness  which  made 
possible,  a  few  years  later,  the  attempt  at  nullification  of 
the  tariff  of  1832.  On  the  other  hand,  the  protective 
policy  was  popular  throughout  the  North,  more  especially 
in  the  very  States  whose  votes  were  essential  to  Jackson, 
in  New  York,  Pennsylvania,  and  Ohio.  The  Jackson  men 
needed  the  votes  of  these  States,  and  were  not  so  confi- 
dent of  getting  them  as  they  might  reasonably  have  been. 
They  failed,  as  completely  as  their  opponents,  to  gauge 
the  strength  of  the  enthusiasm  of  the  masses  for  their 
candidate,  and  they  did  not  venture  to  give  the  Adams 
men  a  chance  of  posing  as  the  only  true  friends  of  domes- 
tic industry. 

The   twentieth   Congress  met   for   its  first    session   in 
December,    1827.     The  elections   of    1826,   at  which    its 


THE  EARLY  PROTECTIVE  MOVEMENT.  8/ 

members  were  chosen,  had  not  been  fortunate  for  the  ad- 
ministration. When  Congress  met  there  was  some  doubt 
as  to  the  political  complexion  of  the  House  ;  but  this  was 
set  at  rest  by  the  election  to  the  speakership  of  the  Dem- 
ocratic candidate,  Stephenson  of  Virginia.1  The  new 
Speaker,  in  the  formation  of  the  committees,  assumed  for 
his  party  the  direction  of  the  measures  of  the  House.  On 
the  committee  on  manufactures,  from  which  the  tariff 
report  and  the  tariff  bill  were  to  come,  he  appointed  five 
supporters  of  Jackson  and  two  supporters  of  Adams.  The 
chairmanship,  however,  was  given  to  one  of  the  latter, 
Mallary,  of  Vermont,  who,  it  will  be  remembered,  had 
been  a  member  of  the  Harrisburg  convention. 

Much  doubt  was  entertained  as  to  the  line  of  action  the 
committee  would  follow.  The  Adams  men  feared  at  first 
that  it  would  adopt  a  policy  of  simple  delay  and  inaction. 
This  fear  was  confirmed  when,  a  few  weeks  after  the 
beginning  of  the  session,  the  committee  asked  for  power 
to  send  for  persons  and  papers  in  order  to  obtain  more 
information  on  the  tariff, — a  request  which  was  opposed 
by  Mallary,  their  chairman,  on  the  ground  that  it  was 
made  only  as  a  pretext  for  delay.  The  Adams  men,  wh< 
formed  the  bulk  of  the  ardent  protectionists,  voted  with 
him  against  granting  the  desired  power.  But  the  South- 
ern members  united  with  the  Jackson  men  from  the 

1  Stephenson's  election  is  said  to  have  been  brought  about  by  Van 
Buren's  influence;  Parton,  "Life  of  Jackson,"  III.,  135.  It  is  worth 
while  to  bear  this  in  mind,  in  view  of  the  part  played  by  Van  Buren  later 
in  the  session. 


88  THE  EARLY  PROTECTIVE  MOVEMENT. 

North,  and  between  them  they  secured  the  passage  of 
the  resolution  asked  by  the  committee.1  The  debate  and 
vote  on  the  resolution  sounded  the  key-note  of  the  events 
of  the  session.  They  showed  that  the  Jackson  men  from 
the  South  and  the  North,  though  opposed  to  each  other 
on  the  tariff  question,  were  yet  united  as  against  the 
Adams  men.2 

But  the  policy  of  delay,  if  such  in  fact  had  been  enter- 
tained by  the  opposition,  was  abandoned.  On  January 
3 1st,  the  committee  presented  a  report  and  a  draft  of  a 
tariff  bill,  which  showed  that  they  had  determined  on  a 
new  plan,  and  an  ingenious  one.  What  that  plan  was, 
Calhoun  explained  very  frankly  nine  years  later,  in  a 
speech  reviewing  the  events  of  1828  and  defending  the 
course  taken  by  himself  and  his  Southern  fellow-members.3 
A  high-tariff  bill  was  to  be  laid  before  the  House.  It  was 
to  contain  not  only  a  high  general  range  of  duties,  but 
duties  especially  high  on  those  raw  materials  on  which 
New  England  wanted  the  duties  to  be  low.  It  was  to 
satisfy  the  protective  demands  of  the  Western  and  Middle 
States,  and  at  the  same  time  to  be  obnoxious  to  the  New 
England  members.  The  Jackson  men  of  all  shades,  the 
protectionists  from  the  North  and  the  free-traders  from 

1  The  power  granted  to  the  committee  by  this  resolution,  to  examine 
witnesses,  was  used  to  a  moderate  extent.     A  dozen  wool  manufacturers 
were  examined,  and  their  testimony  throws  some  light  on  the  state  of  the 
woollen  manufacture  at  that  time.     See  the  preceding  essay,  pp.  42-44. 

2  In  "Congressional  Debates,"  IV.,  862,  870. 
8  Speech  of  1837  ;  "  Works,"  III.,  46-51. 


THE  EARLY  PROTECTIVE  MOVEMENT.  89 

the  South,  were  to  unite  in  preventing  any  amendments ; 
that  bill,  and  no  other,  was  to  be  voted  on.  When  the 
final  vote  came,  the  Southern  men  were  to  turn  around 
and  vote  against  their  own  measure.  The  New  England 
men,  and  the  Adams  men  in  general,  would  be  unable  to 
swallow  it,  and  would  also  vote  against  it.  Combined, 
they  would  prevent  its  passage,  even  though  the  Jackson 
men  from  the  North  voted  for  it.  The  result  expected  was 
that  no  tariff  bill  at  all  would  be  passed  during  the  session, 
which  was  the  object  of  the  Southern  wing  of  the  opposi- 
tion. On  the  other  hand,  the  obloquy  of  defeating  it 
would  be  cast  on  the  Adams  party,  which  was  the  object 
of  the  Jacksonians  of  the  North.  The  tariff  bill  would  be 
defeated,  and  yet  the  Jackson  men  would  be  able  to 
parade  a^  the  true  "  friends  of  domestic  industry." 

The  bill  by  which  this  ingenious  solution  of  the  difficul- 
ties of  the  opposition  was  to  be  reached,  was  reported  to 
the  House  on  January  3 1st  by  the  committee  on  manu- 
factures.1 To  the  surprise  of  its  authors,  it  was  eventually 
passed  both  by  House  and  Senate,  and  became,  with  a 
few  unessential  changes,  the  tariff  act  of  1828. 

The  committee's  bill  in  the  first  place  proposed  a  large 
increase  of  duties  on  almost  all  raw  materials.  The  duty 
on  pig-iron  was  to  go  up  from  56  to  62-J  cents  per  hun- 
dredweight, that  on  hammered  bar-iron  from  90  to  1 12 
cents  per  hundredweight,  and  that  on  rolled  bar  from  $30 

1  The  bill  as  reported  by  the  committee  is  printed  in  "  Congressional 
Debates,"  IV.,  1727  : 


90  THE  EARLY  PROTECTIVE  MOVEMENT. 

to  $37  per  ton.  The  increase  on  hammered  bar  had  been 
asked  by  the  Harrisburg  convention.  But  on  pig  and  on 
rolled  bar  no  one  had  asked  for  an  increase,  not  even  the 
manufacturers  of  iron  who  had  testified  before  the 
committee.1 

The  most  important  of  the  proposed  duties  on  raw 
materials,  however,  were  on  hemp,  flax,  and  wool.  The 
existing  duty  on  hemp  was  $35  per  ton.  It  was  proposed 
to  increase  it  immediately  to  $45,  and  further  to  increase 
it  by  an  annual  increment  of  $5,  till  it  should  finally  reach 
$60.  Hemp  of  coarse  quality  was  largely  raised  in  the 
country  at  that  time,  especially  in  Kentucky.  It  was 
suitable  for  the  making  of  common  ropes  and  of  cotton 
bagging,  and  for  those  purposes  met  with  no  competition 
from  imported'  hemp.  Better  hemp,  suitable  for  making 
cordage  and  cables,  was  not  raised  in  the  country  at  all, 
the  supply  coming  exclusively  from  importation.  The 
preparation  of  this  better  quality  ("water-rotted"  hemp) 
required  so  much  manual  labor,  and  labor  of  so  disagree- 
able a  character,  that  it  would  not  have  been  undertaken 
in  any  event  by  the  hemp  growers  of  this  country. a 

1  See  the  testimony  of  the  three  iron  manufacturers  who  were  examined 
"  American  State  Papers,  Finance,"  V.,  784-792.     Mallary,  in  introducing 
the  bill,   said  :   "  The  committee  gave  the  manufacturer  of  iron   all  he 
asked,  even  more."     "Congressional  Debates,"  IV.,  1748. 

2Gallatin,  "Memorial  of  the  Free-Trade  Convention  "  (1831),  p.  51. 
This  admirable  paper,  perhaps  the  best  investigation  on  tariff  subjects  ever 
made  in  the  United  States,  is  unfortunately  not  reprinted  in  the  edition  of 
Gallatin's  collected  works.  The  original  pamphlet  is  very  scarce.  The 
memorial  is  printed  in  U.  S.  Documents,  1st  session,  22d  Congress, 
Senate  Documents,  vol.  I.,  No.  55. 


THE  EARLY  PROTECTIVE  MOVEMENT.  <)l 

Under  such  conditions  an  increase  of  duty  on  hemp  could 
be  of  no  benefit  to  the  American  grower.  Its  effect 
would  be  simply  to  burden  the  rope  makers  and  the  users 
of  cordage,  and  ultimately  the  ship-builders  and  ship- 
owners. Essentially  the  same  state  of  things  has  contin- 
ued to  our  own  day.  The  high  duties  on  hemp  have  never 
succeeded  in  checking  a  large  and  continuous  importation. 
The  facts  were  then,  and  are  now,  very  similar  with  flax ; 
yet  the  same  duty  of  $60  per  ton  was  to  be  put  on  flax. 

On  wool  a  proposal  of  a  similar  kind  was  made.  The 
duty  under  the  tariff  of  1824  had  been  30  per  cent.  This 
was  to  be  changed  to  a  mixed  specific  and  ad  valorem 
duty,  the  first  mixed  duty  of  importance  in  the  United 
States.1  Wool  was  to  pay  seven  cents  a  pound  (this  was 
reduced  to  four  cents  in  the  act  as  finally  passed),  and  in 
addition  40  per  cent,  in  1828,  45  per  cent,  in  1829,  and 
thereafter  50  per  cent.  The  object  of  the  mixed  duty 
was  to  make  sure  that  a  heavy  tax  should  be  put  on 
coarse  wool.  The  coarse  wool,  used  in  the  manufacture 
of  carpets  and  of  some  cheap  flannels  and  cloths,  was  not 
then  grown  in  the  United  States  to  any  extent,  and, 
indeed,  has  been  grown  at  no  time  in  this  country,  but 
has  always  been  imported,  mainly  from  Asia  Minor  and 
from  South  America.  Its  cost  at  the  place  of  exporta- 
tion was  in  1828  from  four  to  ten  cents  a  pound.2  The 

1  In  the  earlier  editions  of  this  volume  it  was  stated  that  this  was  the  first 
mixed  duty  ever  imposed.     Professor  D.  R.  Dewey  has  called  my  attention  to 
the  fact  that  in  1824  mixed  duties  were  imposed  on  certain  kinds  of  glassware. 

2  Gallatin,  "  Memorial,"  p.  67. 


92 


THE  EARLY  PROTECTIVE  MOVEMENT. 


price  being  so  low,  a  simple  ad  valorem  duty  would  not 
have  affected  it  much.  But  the  additional  specific  duty 
of  seven  (four)  cents  weighted  it  heavily.  The  ad  valorem 
part  of  the  duty  reached  the  higher  grades  of  wool,  which 
were  raised  in  this  country  ;  it  was  calculated  to  please 
the  farmer.  The  specific  part  reached  the  lower  grades, 
which  were  not  raised  in  this  country,  and  was  calculated 
to  annoy  and  embarrass  the  manufacturers.  This  double 
object,  and  especially  the  second  half  of  it,  the  Jackson 
men  wanted  to  attain,  and  for  that  reason  the  policy  of 
admitting  the  cheap  wool  at  low  rates  was  set  aside, — a 
policy  which  has  been  followed  in  all  our  protective 
tariff's,  with  the  sole  exception  of  that  of  1828.' 

Another  characteristic  part  of  the  scheme  was  the 
handling  of  those  duties  on  woollens  that  corresponded 
to  the  duties  on  cheap  wool.  It  had  been  customary  to 
fix  low  duties  on  the  coarse  woollen  goods  made  from 
cheap  wool,  partly  because  of  the  low  duty  on  the  wool 

1  It  was  followed  in  1824,  1832,  1842,  and  again  in  the  wool  and  woollens 
act  of  1867,  on  which  the  existing  duties  [1887]  are  based.  The  rates  on 
wool  have  been  : 


1828 

1832 

1842 

1867 

General  duty  on  wool 

30  per  cent. 

4c. 
plus  40 
per  cent. 

3c. 
plus  30 
per  cent. 

IOC.-I2C. 

plus  ii 
per  cent. 

Duty  on  cheap  wool 

15  per  cent, 
on  wool 
under  loc. 

free, 
wool 
under  8c. 

5  per  cent, 
on  wool 
under  7c. 

on  wool 
under  I2c. 

THE  EARLY  PROTECTIVE   MOVEMENT.  93 

itself,  and  partly  because  coarse  woollens  were  used  largely 
for  slaves  on  Southern  plantations.  Thus  in  1824  woollen 
goods  costing  less  than  33^  centra  yard  had  been  ad- 
mitted at  a  duty  of  25  per  cent.,  while  woollens  in  general 
paid  33^-  per  cent.  In  1828  this  low  duty  on  coarse 
woollens  was  continued,  although  the  wool  of  which  they 
were  made  was  subject  for  the  first  time  to  a  heavy  duty. 
The  object  again  was  to  embarrass  the  manufacturers,  and 
make  the  bill  unpalatable  to  the  protectionists  and  the 
Adams  men. 

The  same  object  appeared  in  the  duty  on  molasses, 
which  was  to  be  doubled,  going  from  five  to  ten  cents  a 
gallon.  A  spiteful  proviso  was  added  in  regard  to  the 
drawback  which  it  had  been  customary  to  allow  on  the 
exportation  of  rum  distilled  from  imported  molasses. 
The  bill  of  1828,  and  the  act  as  finally  passed,  expressly 
refused  all  drawbacks  on  rum  ;  the  intention  obviously 
being  to  irritate  the  New  Englanders.  The  animus  ap- 
peared again  in  the  heavy  duty  on  sail-duck,  and  the  re- 
fusal of  drawback  on  sail-duck  exported  by  vessels  in 
small  quantities  for  their  own  use.1 

In  the  duties  on  woollen  goods  the  changes  from  the 
schedule  proposed  by  the  Harrisburg  convention  were  on 
the  surface  not  very  great ;  but  in  reality  they  were  im- 
portant. The  committee  gave  up  all  pretence  of  ad 

1  Sail-duck  was  charged  9  cents  a  yard,  with  an  increase  of  \  cent  yearly, 
until  the  duty  should  finally  be  12^  cents.  This  was  equivalent  to  40  or  50 
per  cent.  In  1824  the  duty  had  been  15  per  cent.  Drawback  was  refused 
on  any  quantity  less  than  50  bolts  exported  in  one  vessel  at  one  time. 


94  THE  EARLY  PROTECTIVE  MOVEMENT. 

valorem  duties.  This  was  not  an  insignificant  circum- 
stance ;  for  the  ad  valorem  rate  of  the  minimum  system 
was  said  by  its  opponents  to  be  no  more  than  a  device 
for  disguising  the  heavy  duties  actually  levied  under  it. 
The  committee  brushed  aside  this  device,  and  made  the 
duties  on  woollens  specific  and  unambiguous.  On  goods 
costing  50  cents  a  square  yard  or  less,  the  duty  was  16 
cents;  on  goods  costing  between  50  cents  and  $1.00,  40 
cents;  on  those  costing  between  $1.00  and  $2.50,  $1.00; 
and  on  those  costing  between  $2.50  and  $4.00,  $1.60. 
Goods  costing  more  than  $4.00  were  to  pay  45  per  cent. 
These  specific  duties,  it  will  be  seen,  were  the  same  as  if  an 
ad  valorem  duty  of  40  per  cent,  had  been  assessed,  on  the 
minimum  principle,  on  valuations  of  50  cents,  $1.00, 
$2.50,  and  $4.00.  The  changes  from  the  Harrisburg  con- 
vention scheme  were,  therefore,  the  arrangement  of 
specific  duties  in  such  a  way  that  they  were  equivalent  to 
an  ad  valorem  rate  of  but  40  per  cent,  (the  convention  had 
asked  50  per  cent.)  ;  and,  next,  the  insertion  of  a  minimum 
point  of  $1.00,  the  Harrisburg  scheme  having  allowed  no 
break  between  40  cents  and  $2.50.  The  first  change 
might  have  been  submitted  to  by  the  protectionists  ;  but 
the  second  was  like  putting  a  knife  between  the  crevices 
of  their  armor.  We  have  already  noted  the  importance 
of  the  gap  between  the  minimum  points  of  40  cents  and 
$2.50.  A  very  large  part  of  the  imported  goods  were 
worth,  abroad,  in  the  neighborhood  of  $1.00;  and  the 
largest  branch  of  the  domestic  manufacture  made  goods 


THE  EARLY  PROTECTIVE   MOVEMENT.  9$ 

of  the  same  character  and  value.  The  original  scheme 
had  given  a  very  heavy  duty,  practically  a  prohibitory 
duty,  on  these  goods,  while  the  new  scheme  gave  a  com- 
paratively insignificant  duty  of  40  cents.  As  one  of  the 
protectionists  said  :  "  The  dollar  minimum  was  planted  in 
the  very  midst  of  the  woollen  trade." 

The  bill,  in  fact,  was  ingeniously  framed  with  the  inten- 
tion of  circumventing  the  Adams  men,  especially  those 
from  New  England.  The  heavy  duties  on  iron,  hemp, 
flax  and  wool  were  bitter  pills  for  them.  The  new  dollar 
minimum  took  the  life  out  of  their  scheme  of  duties  on 
woollen  goods.  The  molasses  and  sail-duck  duties,  and 
the  refusal  of  drawbacks  on  rum  and  duck,  were  undis- 
guised blows  at  New  England.  At  the  same  time,  some 
of  these  very  features,  especially  the  hemp,  wool,  and  iron 
duties,  served  to  make  the  bill  popular  in  the  Western 
and  Middle  States,  and  made  opposition  to  it  awkward  for 
the  Adams  men.  The  whole  scheme  was  a  characteris- 
tic product  of  the  politicians  who  were  then  becoming 
prominent  as  the  leaders  of  the  Democracy,  men  of  a 
type  very  different  from  the  statesmen  of  the  preceding 
generation.  Clay  informs  us  that  it  was  one  of  the  many 
devices  that  had  their  origin  in  the  fertile  brain  of  Van 

1  "  Congressional  Debates,"  IV.,  2274.  See  the  statement  of  the  effect 
of  the  minimum  system  in  "  State  Papers,"  1827-28,  No.  143.  Davis  (of 
Massachusetts)  said  that  the  minimum  of  $1.00  "  falls  at  a  point  the  most 
favorable  that  could  be  fixed  for  the  British  manufacturer.  *  *  *  It 
falls  into  the  centre  of  the  great  body  of  American  business."  "  Congres- 
sional Debates,"  IV.,  1894,  1895.  See  to  the  same  effect  the  speech  of 
Silas  Wright,  Ibid.,  p.  1867. 


g6  THE  EARLY  PROTECTIVE  MOVEMENT. 

Buren.1  Calhoun  said  in  1837  that  the  compact  between 
the  Southern  members  and  the  Jackson  leaders  had  come 
about  mainly  through  Silas  Wright ;  and  Wright  made 
no  denial.2 

The  result  of  this  curious  complication  of  wishes  and 
motives  was  seen  when  the  tariff  bill  was  finally  taken  up 
in  the  House  in  March.  Mallary,  as  chairman  of  the  com- 
mittee on  manufactures,  introduced  and  explained  the 
bill.  Being  an  Adams  man,  he  was  of  course  opposed  to 
it,  and  moved  to  amend  by  inserting  the  scheme  of  the 
Harrisburg  convention.  The  amendment  was  rejected 
by  decisive  votes,  102  to  75  in  committee  of  the  whole,8 
and  114  to  80  in  the  House.  The  majority  which  defeated 

1  "  I  have  heard,  without  vouching  for  the  fact,  that  it  [the  tariff  of  1828] 
was  so  framed  on  the  advice  of  a  prominent  citizen,  now  abroad  [Van  Bu- 
ren had  been  made  minister  to  England  in   1831],  with  the  view  of  ulti- 
mately defeating  the  bill,  and  with  assurances  that,  being  altogether  unac- 
ceptable to  the  friends  of  the  American  system,  the  bill  would  be  lost." 
Clay's  speech  of  February,  1832.     "  Works  "  II.,  13. 

2  See  Calhoun's  speech  of  1837,  as  cited  above,  p.  88.     In  the  debate  of 
1837,  Wright  admitted  the  compact  with  the  Southern  members,  but  said 
that  he  had  warned  them  that  the  New  England  men  in  the  end  might 
swallow  the  obnoxious  bill.   "  Congressional  Debates,"  XIII.,  922,  926-927. 
Wright  was  a  member  of  the  committee  on  manufactures,  was  the  spokes- 
man of  the  Jackson  men  who  formed  the  majority  of  its  members,  and  had 
charge  of  the  measure  before    the    House.     Jenkins,  "  Life  of  Wright," 

PP.  53-60- 

The  Adams  men  saw  through  the  scheme  at  the  time.  Clay  wrote  to  J. 
J.  Crittenden,  in  February,  even  before  the  House  began  the  discussion  of 
the  bill  :  "The  Jackson  party  are  playing  a  game  of  brag  on  the  subject  of 
the  tariff.  They  do  not  really  desire  the  success  of  their  own  measure  ; 
and  it  may  happen  in  the  sequel  that  what  is  desired  by  neither  party  will 
command  the  votes  of  both."  "  Life  of  Crittenden,"  I.,  67. 

3  "  Congressional  Debates,  "  IV.,  2038. 


THE  EARLY  PROTECTIVE  MOVEMENT.  g? 

the  amendment  was  composed  of  all  the  Southern  mem- 
bers, and  of  the  Jackson  members  from  the  North,  chiefly 

from  New  York,  Pennsylvania,  Ohi9,  and  Kentucky.  The 

'/'-, 

minority  consisted  almost  exclusively  of  friends  of  the 
administration.1  Mallary  then  moved  to  substitute  that 
part  only  of  the  Harrisburg  convention  scheme  which 
fixed  the  duties  on  wool  and  woollens  ;  that  is,  the  original 
minimum  scheme,  with  a  uniform  duty  of  forty  per  cent, 
on  wool.  This  too  was  rejected,  but  by  a  narrow  vote, 
98  to  97."  The  Jackson  men  permitted  only  one  change 
of  any  moment :  they  reduced  the  specific  duty  on  raw 
wool  from  seven  cents,  the  point  fixed  by  the  committee, 
to  four  cents,  the  ad  valorem  rate  remaining  at  40  per 
cent.3  The  duty  on  molasses  was  retained,  by  the  same 
combination  that  refused  to  accept  the  Harrisburg 
scheme.4  The  Southern  members  openly  said  that  they 
meant  to  make  the  tariff  so  bitter  a  pill  that  no  New  Eng- 
land  member  would  be  able  to  swallow  it.5 

1  See   Niles,  XXXV.,  57,  where  the  various  votes  on  the   bill  are  ana- 
nalyzed.     The  vote  en  Mallary's  amendment  was  : 

Yeas     ...     78  Adams  men,      2,  Jackson  men      ...       80 
Nays    ...     14       "          "     100         "          "...     114 

2  "  Congressional  Debates,"  IV.,  2050. 

a  The  Adams  men  seem  to  have  opposed  this  reduction.   The  vote  was  : 
Yeas     .     .     .     10  Adams  men,  90  Jackson  men      .     .     .     100 
Nays    ...     79       "          "20         "          "        ...       99 

4  On  reducing  the  molasses  duty,  the  vote  was  : 

Yeas     ...     72  Adams  men,  10  Jackson  men      ...       82 
Nays    .     .     .     19       "          "95         "  "        ...      114 

5  Most  of  the  Southern  members  kept  silence  during  the  debates  on  the 
details  of  the  bill.     After  its  third  reading,  McDuffie  and  others  made  long 
speeches  against  it.     One  of  the  South  Carolina  Congressmen,  however, 


98  THE  EARLY  PROTECTIVE  MOVEMENT. 

When  the  final  vote  on  the  bill  came,  the  groups  of 
members  split  up  in  the  way  expected  by  the  Democrats. 
The  Southern  members,  practically  without  exception, 
voted  against  it.  Those  from  the  Middle  and  Western 
States  voted  almost  unanimously  for  it.  The  Jackson 
men  voted  for  their  own  measure  for  consistency's  sake  \ 
the  Adams  men  from  these  States  joined  them,  partly  for 
political  reasons,  mainly  because  the  bill,  even  with  the 
obnoxious  provisions,  was  acceptable  to  their  constitu- 
ents. Of  the  New  England  members,  a  majority,  23  out 
of  39,  voted  in  the  negative.  The  affirmative  votes  from 
New  England,  however,  were  sufficient,  when  added 
to  those  from  the  West  and  the  Middle  States,  to  en- 
sure its  passage.  The  bill  accordingly  passed  the 
House.' 

This  result  had  not  been  entirely  unexpected.  The 
real  struggle,  it  was  felt,  would  come  in  the  Senate,  where 
the  South  and  New  England  had  a  proportionately  large 
representation.  In  previous  years  the  Senate  had  main- 
tained, in  its  action  on  the  tariff  bills  of  1820  and  1824,  a 

said  frankly  :  "  He  should  vote  for  retaining  the  duty  on  molasses,  because 
he  believed  that  keeping  it  in  the  bill  would  get  votes  against  its  final  pas- 
sage" "Congressional  Debates,"  IV.,  2349.  The  Jackson  free-traders 
from  the  North  (there  were  a  few  such)  followed  the  same  policy.  See 
Cambreleng's  remarks,  ibid.,  3326.  See  also  the  passage  quoted  in  Niles, 
XXXV.,  52. 

1  The  vote  was  : 

Yeas     .     .     .     .     61  Adams  men,  44  Jackson  men     .     .     .     105 
Nays    ....     35       "         "      59        "          "...       94 

If  six  of  those  New  England  members  who  voted  yea,  had  voted  nay, 
the  bill  would  have  failed.  Niles,  he.  fit. 


THE  EARLY  PROTECTIVE  MOVEMENT.  99 

much  more  conservative  position  than  the  House.1  But 
in  1828  the  course  of  events  in  the  Senate  was  in  the  main 
similar  to  that  in  the  House.  T£he  bill  was  referred  to 
the  committee  on  manufactures,  and  was  returned  with 
amendments,  of  which  the  most  important  referred  to  the 
duty  on  molasses  and  to  the  duties  on  woollen  goods. 
The  duty  on  molasses  was  to  be  reduced  from  10  cents, 
the  rate  fixed  by  the  House,  to  7^  cents.  The  duties  on 
woollen  goods,  in  the  bill  as  passed  by  the  House,  had 
been  made  specific,  equivalent  to  40  per  cent,  on  minimum 
valuations  of  50  cents,  $1.00,  $2.50,  and  $4.00.  The  Sen- 
ate committee's  amendment  made  the  duties  ad  valorem 
in  form,  to  be  assessed  on  the  minimum  valuation  just 
mentioned.  The  rate  was  to  be  40  per  cent,  for  the  first 
year  ;  thereafter,  45  per  cent.2 

1  The  tariff  of  1824  was  much  changed  in  the  Senate  from  the  shape  in 
which  it  had  been  passed  by  the  House.      "  Annals  of  Congress,"  1823-24, 

PP-  723-735. 

2  It  was  expected  that  this  change  to  ad  valorem  duties  would  have  still 
another  effect.     According  to  the  method  then  in  use  for  assessing  ad  valo- 
rem duties,  the  dutiable  value  of  goods  imported  from  Europe  was  ascer- 
tained by  adding  10  per  cent,  to  the  cost  or  invoice  value.     See  the  act  of 
1828,   "  Statutes  at  Large,"  IV.,  274,  substantially  re-enacting  the  provi- 
sions of  the  revenue-collection  act  of  1789,  "  Statutes  at  Large,"  I.,  141. 
It  was  expected  that  by  the  force  of  this  provision  the  effect  of  the  ad  valo- 
rem rate,  under  the  Senate  amendment,  would  be  to  increase  the  duty  not 
merely  to  45  per  cent.,  but  to  49^  per  cent.     Hence  Webster,  in  his  speech 
on  the  bill,  spoke  of  the  amendment  as  carrying  the  duty  "  up  to  45  or  per- 
haps 50  per  cent,  ad  valorem''    "  Works."  III.,  231.     But  the  Secretary  of 
the  Treasury,  Rush,  finally  decided,  very  properly,  that  the  provision  did 
not  apply  to  duties  assessed  on  minimum  valuations,  thereby  causing  much 
dissatisfaction  among  the  protectionists.     See  "  Congressional   Debates,'' 
VI.,  8o~. 


100  THE  EARLY  PROTECTIVE  MOVEMENT. 

Other  amendments  were  proposed,  all  tending  to  make 
the  bill  less  objectionable  to  the  New  England  Senators. 
Most  of  them  were  rejected.  The  proposed  reduction  on 
molasses  was  rejected  by  the  same  combination  that  had 
prevented  the  reduction  from  being  made  in  the  House. 
The  Southern  Senators,  and  those  from  the  North  who 
supported  Jackson,  united  to  retain  the  duty  of  10  cents. 
When  Webster  moved  to  reduce  the  duty  on  hemp,  only 
the  New  England  Senators  voted  with  him.  Again,  an 
attempt  was  made  to  increase  the  duty  on  coarse  wool- 
lens, on  which,  it  will  be  remembered,  the  House  had  put 
a  low  rate,  notwithstanding  the  heavy  duty  on  coarse 
wool.  The  Senate,  by  a  strict  party  vote,  retained  the 
duty  as  the  House  had  fixed  it.  One  of  the  amendments, 
however,  was  carried — that  which  changed  the  duties  on 
woollens  to  an  ad  valorem  rate  of  45  per  cent.  Two 
Democratic  Senators,  Van  Buren  and  Woodbury,  who 
had  voted  with  the  South  against  other  amendments, 
voted  in  favor  of  this  one.  It  was  carried  by  a  vote  of 
24  to  22,  while  all  others  had  been  rejected  by  a  vote  of 
22  to  24.' 

With  this  amendment,  the  bill  was  finally  passed  by 
the  Senate,  the  vote  being  26  to  21.  The  Southern  Sena- 
tors (except  two  from  Kentucky,  and  one  each  from  Ten- 
nessee and  Louisiana)  voted  against  it.  Those  from  the 
Middle  and  Western  States  all  voted  for  it.  Those  from 
New  England  split ;  six  voted  yea,  five  nay.  The  result 

1  The  votes  in  the  Senate  are  given  in  Niles,  XXXIV.,  178,  179,  196. 


THE  EARLY  PROTECTIVE  MOVEMENT.  IOI 

seems  to  have  depended  largely  on  Webster.  His  col- 
league Silsbee  voted  nay,  and  Webster  himself  had  been 
in  doubt  a  week  before  the  final  vote.1  Finally  he  swal- 
lowed the  bill ;  and  he  carried  with  him  enough  of  the 
New  England  Senators  to  ensure  its  passage. 

Webster  defended  his  course  to  his  constituents  on  the 
ground  that  the  woollens  amendment  (fixing  the  45  per 
cent,  ad  valorem  rate)  had  made  the  bill  much  more  favor, 
able  to  the  manufacturers.  He  said  he  should  not  h£ve 
voted  for  it  in  the  shape  in  which  the  House  passed  it.a 
Calhoun  made  the  same  statement  in  1837,  in  the  speech 
to  which  reference  has  already  been  made.3  No  doubt 
the  slight  change  on  woollens  mollified  in  some  degree 
the  New  England  men  ;  but  after  all,  political  motives,  or, 
as  Webster  put  it,  "  other  paramount  considerations," 
caused  them  to  swallow  the  bill.  They  were  afraid  to 
reject  it,  for  fear  of  the  effect  in  the  approaching  campaign 
and  election.4 

1  "  Memoirs  of  J.  Q.  Adams,"  VII.,  530,  534. 

2  In  a  speech  made  a  month  later  ;  printed  in  his  "  Works,"  IM  165.     In 
the  House,  the  representative  from  Boston  had  voted  against  the  bill,  and 
Webster  commended  his  action.     In  his  Senate  speech  Webster  had  said 
that,  even  at  the  45  per  cent,  rate,  the  duty  on  woollens  was  barely  sum 
cient  to  compensate  for  the  duty  on  wool.     "  Works,"  III.,  241. 

3"  Works,"  III.,  50,  51.  Calhoun  even  accused  Van  Buren  of  being  the 
"real  author"  of  the  tariff  of  1828.  He  said  that,  but  for  Van  Buren's 
vote  in  favor  of  the  woollens  amendment,  there  would  have  been  a  tie  on 
the  amendment  ;  his  own  casting  vote  as  Vice-President  would  have  de- 
feated it  ;  the  bill,  without  the  amendment,  would  have  been  rejected  by 
Webster  and  the  other  New  England  Senators.  Therefore,  Van  Buren 
was  responsible  for  its  having  been  passed. 

4  After  the  final  vote  in  the  House,  John  Randolph  said :  "  The  bill  re- 


IO2  rHE  EARLY  PROTECTIVE  MOVEMENT. 

The  act  of  1828  had  thus  been  passed  in  a  form  ap- 
proved by  no  one.  It  was  hardly  to  be  expected  that  a 
measure  of  this  kind  should  long  remain  on  the  statute- 
book,  and  it  was  superseded  by  the  act  of  1832.  During 
the  intervening  four  years  several  causes  combined  to  lead 
to  more  moderate  application  of  the  protective  principle. 
The  protective  feeling  diminished.  Public  opinion  in  the 
North  had  been  wellnigh  unanimous  in  favor  of  protec- 
tion between  1824  and  1828;  but  after  1828,  although 
there  was  still  a  large  preponderance  for  protection, ' 
there  was  a  strong  and  active  minority  against  it.  The 
tariff  question  ceased  to  be  an  important  factor  in  politics, 
so  that  this  obstacle  to  its  straightforward  treatment  was 
removed.  And,  finally,  there  was  a  strong  desire  to  make 

f erred  to  manufactures  of  no  sort  or  kind,  except  the  manufacture  of  a 
President  of  the  United  States."  In  1833,  Root,  a  representative  from 
New  York,  said  :  "  The  act  of  1828  he  had  heard  called  the  bill  of  Abom- 
inations. ...  It  certainly  grew  out  of  causes  connected  with  President- 
making.  It  was  fastened  on  the  country  in  the  scuffle  to  continue  the  then 
incumbent  in  office,  on  one  side,  and  on  the  other  to  oust  him  and  put  an- 
other in  his  stead.  .  .  .  The  public  weal  was  disregarded,  and  the  only 
question  was :  Shall  we  put  A  or  B  in  the  presidential  chair  ?  When  it 
was  thought  necessary  to  secure  a  certain  State  in  favor  of  the  then  incum- 
bent, a  convention  was  called  at  Harrisburg  to  buy  them  over.  [See,  how- 
ever, the  note  to  p.  84,  above.]  On  the  other  side  another  convention  was 
called,  who  mounted  the  same  hobby.  The  price  offered  was  the  same  on 
both  sides  :  a  high  tariff.  One  candidate  was  thought  to  be  a  favorite, 
because  he  was  supposed  to  be  a  warm  friend  of  the  protective  system,  and 
would  support  a  high  tariff  ;  but  they  were  told,  on  the  other  side,  that  their 
candidate  would  go  for  as  high  a  tariff."  "  Congressional  Debates,"  IX., 
1104,  1105. 

1  As  Gallatin  admits:  "It  is  certain  that  at  this  time  (1832)  the  tariff 
system  is  supported  by  a  majority  of  the  people  and  of  both  Houses  of 
Congress."  "  Works,"  II.,  455. 


THE  EARLY  PROTECTIVE  MOVEMENT.  103 

some  concession  to  the  growing  opposition  of  the  South. 
It  is  true  that  in  1832  Clay  and  the  more  extreme  protec- 
tionists wished  to  retain  the  act  ^pf  1828  intact,  and  to 
effect  reductions  in  the  revenue  by  lowering  the  non-pro- 
tective duties  only.1  But  most  of  the  protectionists,  led 
by  Adams,  took  a  more  moderate  course,  and  consented 
to  the  removal  of  the  abominations  of  1828. 

Even  before  1832  some  changes  were  made.  In  1830 
the  molasses  abomination  was  got  rid  of.  The  duty  on 
molasses  was  reduced  from  ten  cents  a  gallon  to  five  cents, 
the  rate  imposed  before  1828,  and  the  drawback  on  ex- 
portation of  rum  was  restored.2  At  the  same  time  the 
duties  on  tea,  coffee,  and  cocoa  were  lowered,  as  one 
means  of  reducing  the  revenue.3 

The  most  important  step  taken  in  1832  was  the  entire 
abolition  of  the  minimum  system.  Woollen  goods  were 
subjected  to  a  simple  ad  valorem  duty  of  50  per  cent. 
The  minimum  system,  as  arranged  in  the  act  of  1828, 
had  been  found  to  work  badly.  The  manufacturers  said 
it  had  been  positively  injurious  to  them.4  As  might  have 
been  expected,  it  led  to  attempts  at  evasion  of  duties, 
to  undervaluation,  and  to  constant  disputes  at  the  cus- 

"' Works,"  I.,  586-595- 

*  "  Statutes  at  Large,"  IV.,  419.  The  act  seems  to  have  passed  without 
debate  or  opposition. 

3  Ibid.,  p.  403. 

4  Browne,  of  Boston,   a  manufacturer  who  had  actively  supported  the 
minimum  system,  declared:    "I  could  manufacture  to  better  advantage 
under  the  tariff  of  1816  than  under  that  of  1828  ;  for  the  duty  on  wool  was 
then  lower,  and  that  on  cloths  a  better  protection."     Niles.  XLL,  204. 


104  THE  EARLY  PROTECTIVE  MOVEMENT. 

torn-houses.  The  troubles  arose  mainly  under  the  dollar 
minimum.  Goods  worth  $1.25  or  $1.50  were  invoiced  so 
as  to  bring  their  values  below  $1.00,  in  order  to  escape 
the  duty  under  the  next  minimum  point,  $2.50.  The 
difficulties  were  ascribed  to  the  depravity  of  foreign  ex- 
porting houses  and  to  the  laxity  of  the  revenue  laws, 
and  in  1830  a  special  act  in  regard  to  goods  made  of  cot- 
ton or  wool  was  passed,  making  more  stringent  the  pro- 
visions for  collecting  duties.  But  the  troubles  continued 
nevertheless,1  and,  in  truth,  they  were  inevitable  under 
a  system  which  imposed  specific  duties  graded  accord- 
ing to  the  value  of  the  goods.  Similar  duties  were 
much  in  use  during  the  period  of  high  protection  after 
the  Civil  War,  and  led  to  the  same  unceasing  complaints  of 
dishonesty  and  fraud,  and  the  same  efforts  to  make  the 
law  effective  by  close  inspection  and  severer  penalties. 
In  1832,  the  protectionists  themselves  swept  away  the 
minimum  system.  The  ad  valorem  duty  of  50  per  cent, 
which  was  put  in  its  place  was  felt  to  be  not  without  its 

1  "  Statutes  at  Large,"  IV. ,  400.  See  the  speeches  of  Mallary,  "  Congres- 
sional Debates,"  VI.,  795-803,  and  of  Davis,  ibid.,  p.  874,  for  instances  and 
proofs  of  the  frauds.  The  act  provided  for  forfeiture  of  goods  fraudulently 
undervalued  ;  but  no  verdicts  under  it  could  be  obtained.  At  the  protec- 
tionist convention  held  in  New  York  in  1831,  one  of  the  speakers  said: 
' '  The  same  mistaken  current  of  opinion  which  prevailed  on  'change,  en- 
tered and  influenced  the  jury-box.  Men  thought  the  law  rigorous  and 
severe.  They  considered  it  hard  that  a  man  should  forfeit  a  large  amount 
of  property  for  a  mere  attempt  to  evade  an  enormous  duty.  In  two  years 
there  was  but  a  single  case  pursued  into  a  court  of  justice."  Niles,  XLI., 
203.  See  also  the  Report  on  Revenue  Frauds,  made  by  a  committee  of 
this  same  convention,  in  Niles,  XLI.,  Appendix,  p.  33. 


THE  EARLY  PROTECTIVE  MOVEMENT.  1 05 

dangers  in  the  matter  of  fraud  and  under-valuation,  but  it 
was  harmless  as  compared  with  the  minimum  system  of 

I828.1 

.•/ 1 

The  other  "  abominations  "  of  the  act  of  1828  were 
also  done  away  with  in  1832.  The  duty  on  hemp,  which 
had  been  $60  a  ton  in  1828,  was  reduced  to  a  duty  of  $40. 
Flax,  which  had  also  been  subjected  to  a  duty  of  $60  a 
ton  in  1828,  was  put  on  the  free  list.  The  duties  on  pig- 
and  bar-iron  were  put  back  to  the  rates  of  1824.  The 
duty  on  wool  alone  remained  substantially  as  it  had  been 
in  1828,  being  left  as  a  compound  duty  of  4  cents  a  pound 
and  40  per  cent.  But  even  here  the  special  abomination 
of  1828  was  removed;  cheap  wool,  costing  less  than 
8  cents  a  pound,  was  admitted  free  of  duty.  In  fact,  the 
protective  system  was  put  back,  in  the  main,  to  where  it 
had  been  in  1824.  The  result  was  to  clear  the  tariff  of 
the  excrescences  which  had  grown  on  it  in  1828,  and  to 
put  it  in  a  form  in  which  the  protectionists  could  advo- 
cate its  permanent  retention. 

Even  in  this  modified  form,  however,  the  system  could 
not  stand  against  the  attacks  of  the  South.  In  the  fol- 
lowing year,  1833,  the  compromise  tariff  was  passed.  It 
provided  for  a  gradual  and  steady  reduction  of  duties. 
That  reduction  took  place;  and  in  July,  1842,  a  general 

1  J.  Q.  Adams,  who  was  most  active  in  framing  the  act  of  1832,  tried  to 
embody  the  "  home  valuation  "  principle  into  it ;  but  in  vain.  "  Congres- 
sional Debates,"  VIII.,  3658,  3671.  He  also  tried  to  give  the  government 
an  option  to  take  goods  on  its  own  account  at  a  slight  advance  over  the 
declared  value  ;  but  this  plan  also  was  rejected.  Ibid.,  p.  3779. 


IO6  THE  EARLY  PROTECTIVE  MOVEMENT. 

level  of  20  per  cent,  was  reached.  Two  months  later,  in 
September,  1842,  a  new  tariff  act,  again  of  distinctly  pro- 
tective character,  went  into  effect.  But  this  act  belongs 
to  a  different  period,  and  has  a  different  character  from 
the  acts  of  1824,  1828,  and  1832.  The  early  protective 
movement,  which  began  in  1819,  and  was  the  cause  of 
the  legislation  of  the  following  decade,  lost  its  vigor  after 
1832.  Strong  popular  sentiment  in  favor  of  protection 
wellnigh  disappeared,  and  the  revival  of  protection  in 
1842  was  due  to  causes  different  from  .those  that  brought 
about  the  earlier  acts.  The  change  in  popular  feeling  is 
readily  explained.  The  primary  object  of  the  protective 
legislation  of  the  earlier  period  had  been  attained  in 
1842.  The  movement  was,  after  all,  only  an  effort,  half 
conscious  of  its  aim,  to  make  more  easy  the  transition  from 
the  state  of  simple  agriculture  and  commerce  which  pre- 
vailed before  the  war  of  1812,  to  the  more  diversified  condi- 
tion which  the  operation  of  economic  forces  was  reason- 
ably certain  to  bring  about  after  1815.  The  period  of  tran- 
sition was  passed,  certainly  by  1830,  probably  earlier.  At 
all  events,  very  soon  after  1820  it  was  felt  that  there  was 
not  the  same  occasion  as  in  previous  years  for  measures 
to  tide  it  over,  and  a  decline  in  the  protective  feeling 
was  the  natural  consequence. 

Not  the  least  curious  part  of  the  history  of  the  act  of 
1828  is  the  treatment  it  has  received  from  the  protec- 
tionist writers.  At  the  time,  the  protectionists  were  far 
from  enthusiastic  about  it.  Niles  could  not  admit  it  to 


THE  EARLY  PROTECTIVE  MOVEMENT.  IO/ 

be  a  fair  application  of  the  protective  policy,1  while  Mat- 
thew Carey  called  it  a  "  crude  mass  of  imperfection,"  and 
admitted  it  to  be  a  disappointment  to  the  protectionists.2 
In  later  years,  however,  when  the  details  of  history  had 
been  forgotten,  it  came  to  be  regarded  with  more  favor. 
The  duties  being  on  their  face  higher  than  those  of  pre- 
vious years,  it  was  considered  a  better  application  of  pro- 
tective principles.  Henry  C.  Carey,  on  whose  authority 
rest  many  of  the  accounts  of  our  economic  history,  called 
it  "  an  admirable  tariff."5  He  represented  it  as  having 
had  great  effect  on  the  prosperity  of  the  country,  and  his 
statements  have  often  been  repeated  by  protectionist 
writers. 

It  is  almost  impossible  to  trace  the  economic  effect  of 
any  legislative  measure  that  remains  in  force  no  more 
than  four  years  ;  and  certainly  we  have  not  the  materials 
for  ascertaining  the  economic  effects  of  the  act  of  1828. 
Taken  by  itself,  that  act  is  but  a  stray  episode  in  our  po- 
litical history.  It  illustrates  the  change  in  the  character  of 
our  public  men  and  our  public  life  which  took  place  during 
the  Jacksonian  time.  As  an  economic  measure,  it  must 
be  considered,  not  by  itself,  but  as  one  of  a  series  of 

'Niles,  XXXVII.,  81  ;  XXXVI.,  113,  and  elsewhere.  Niles  objected 
especially  to  the  $1.00  minimum  on  woollens. 

2  See  his  "Common-Sense  Address  "  (1829),  p.  XI. ;  "  The  Olive  Branch/' 
No.  III.,  p.  54  J  No.  IV.,  p.  3  (1832). 

3 See  his  "  Review  of  the  Report  of  D.  A.  Wells"  (1869),  p.  4  ;  and  to 
the  same  effect,  "Harmony  of  Interests,"  p.  5,  and  "Social  Science, " 
II.,  225. 


108  THE  EARLY  PROTECTIVE  MOVEMENT. 

measures,  begun  tentatively  in  1816,  and  carried  out  more 
vigorously  in  1824,  1828,  and  1832,  by  which  a  protective 
policy  was  maintained  for  some  twenty  years.  It  is  very 
doubtful  whether,  with  the  defective  information  at  our 
disposal,  we  can  learn  much  as  to  the  effect  on  the  pros- 
perity of  the  country  even  of  the  whole  series  of  tariff  acts. 
Probably  we  can  reach  conclusions  of  any  value  only  on 
certain  limited  topics,  such  as  the  effects  of  protection  to 
young  industries  during  this  time  ;  as  to  the  general  effect 
of  the  protective  measures  we  must  rely  on  deduction 
from  general  principles.  At  all  events,  no  one  can  trace 
the  economic  effects  of  the  act  of  1828.  To  ascribe  to  it 
the  supposed  prosperity  of  the  years  in  which  it  was  in 
in  force,  as  Henry  C.  Carey  and  his  followers  have  done, 
is  only  a  part  of  that  exaggeration  of  the  effect  of  pro- 
tective duties  which  is  as  common  among  their  opponents 
as  among  their  advocates. 


CHAPTER^,". 
THE  TARIFF,  1830-1860. 


IN  the  years  between  1832  and  1860  there  was  great 
vacillation  in  the  tariff  policy  of  the  United  States ;  there 
were  also  great  fluctuations  in  the  course  of  trade  and  in- 
dustry. A  low  tariff  was  succeeded  by  a  high  tariff,  which 
was  in  turn  succeeded  by  another  low  tariff.  Periods  of 
undue  inflation  and  of  great  demoralization,  of  prosperity 
and  of  depression,  followed  each  other.  The  changes  in 
the  rates  of  duty  and  the  fluctuations  in  industrial  history 
have  often  been  thought  to  be  closely  connected.  Protec- 
tionists have  ascribed  prosperity  to  high  tariffs,  depression 
to  low  tariffs  ;  free  traders  have  reversed  the  inference. 
It  is  the  object  of  the  present  essay  to  trace,  so  far  as 
this  can  be  done,  the  economic  effect  of  tariff  legislation 
during  the  thirty  years  of  varying  fortune  that  preceded 
the  civil  war. 

First,  by  way  of  introduction,  a  sketch  must  be  given 
of  the  history  of  the  tariff.  We  begin  with  the  tariff  act 
of  1832,  a  distinctly  protectionist  measure,  passed  by  the 
Whigs,  or  National  Republicans,  which  put  the  protective 
system  in  a  shape  such  as  the  advocates  of  protection 
hoped  it  might  retain  permanently.  It  levied  high  duties 

109 


IIO  THE    TARIFF,    1830-1860. 

on  cotton  and  woollen  goods,  iron,  and  other  articles 
to  which  protection  was  meant  to  be  applied.  On  arti- 
cles not  produced  in  the  United  States,  either  low  duties 
were  imposed,  as  on  silks,  or  no  duties  at  all,  as  on  tea  and 
coffee.  The  average  rate  on  dutiable  articles  was  about  33 
per  cent. 

In  1833,  the  Compromise  Tariff  Act  was  passed,  and 
remained  in  force  until  1842.  That  act,  there  can  be 
little  doubt,  was  the  result  of  an  agreement  between  Clay 
and  Calhoun,  the  leaders  of  the  protectionists  and  free 
traders,  while  it  secured  also  the  support  of  the  Jackson 
administration.  Clay  had  been  hitherto  the  most  uncom- 
promising of  the  protectionists ;  Calhoun  had  represented 
the  extreme  Southern  demand  that  duties  should  be  re- 
duced to  a  horizontal  level  of  15  or  20  per  cent.1  The 
compromise  provided  for  the  retention  of  a  considerable 
degree  of  protection  for  nearly  nine  years,  and  thereafter 
for  a  rapid  reduction  to  a  uniform  20  per  cent.  rate.  The 
tariff  of  1832  was  the  starting-point.  All  duties  which 
in  that  tariff  exceeded  20  percent,  were  to  have  one  tenth 
of  the  excess  over  20  per  cent,  taken  off  on  January  I, 
1834;  one  tenth  more  on  January  I,  1836;  again  one 
tenth  in  1838;  and  another  in  1840.  That  is,  by  1840, 
four  tenths  of  the  excess  over  20  per  cent,  would  be  gone. 


1  The  Nullifiers  had  said  that  such  a  horizontal  rate  was  the  least  they 
were  willing  to  accept.  See  the  Address  to  the  People  of  the  United  States 
by  the  South  Carolina  Convention,  in  the  volume  of  "  State  Papers  on  Nul- 
lification," published  by  the  State  of  Macsachusetts,  p.  69. 


THE    TARIFF,    1830-1860.  Ill 

Then,  on  January  i,  1842,  one  half  the  remaining  excess 
was  to  be  taken  off ;  and  on  July  i,  1842,  the  other  half 
of  the  remaining  excess  was  to  go.  After  July  I,  1842, 
therefore,  there  would  be  a  uniform  fate  of  20  per  cent, 
on  all  articles.  Obviously,  the  reduction  was  very  gradual 
from  1833  till  1842,  while  in  the  first  six  months  of  1842 
a  sharp  and  sudden  reduction  was  to  take  place. 

Considered  as  a  political  measure,  the  act  of  1833  may 
deserve  commendation.  As  an  economic  or  financial 
measure,  there  is  little  to  be  said  for  it.  It  was  badly 
drafted.  No  provision  was  made  in  it  as  to  specific 
duties ;  yet  it  was  obviously  meant  to  apply  to  such 
duties,  and  the  Secretary  of  the  Treasury  had  to  take  it 
on  himself  to  frame  rules  as  to  the  manner  of  ascertaining 
the  ad  valorem  equivalents  of  specific  duties  and  making 
the  reductions  called  for  by  the  act.1  Again,  the  reduc- 
tions of  duty  were  irregular.  Thus  on  one  important 
article,  rolled  bar-iron,  the  duty  of  1832  had  been  specific, 
— $1.50  per  hundredweight.  This  was  equivalent,  at  the 
prices  of  1832,  to  about  95  per  cent.  The  progress  of  the 
reductions  is  shown  in  the  note.2  Up  to  1842,  they  were 

1  The  instructions  issued  from  the  Treasury  Department  may  be  found 
in  "  Exec.  Doc."  1833-34,  vol.  I.,  No.  43.     It  has  been  thought  that  the 
act  did  not  apply  to  specific  duties  ;  but  this  is  a  mistake. 
8  Year.  Duty,  per  cent. 

1834  87 

1836  80 

1838  72.5 

1840  65 

Jan.  i,  1842  42.5 

July  5,   1842  20 

This  calculation  is  on  the  basis  of  the  prices  of  1833.     If  prices  changed 


112  THE    TARIFF,    1830-1860. 

comparatively  moderate ;  but  in  the  six  months  from  Jan- 
uary i  to  July  i,  1842,  the  duty  dropped  from  65  to  20 
per  cent.  Producers  and  dealers  necessarily  found  it 
hard  to  deal  with  such  changes.  It  is  true  that  a  long 
warning  was  given  them ;  but,  on  the  other  hand,  Con- 
gress might  at  any  moment  interfere  to  modify  the  act. 
Finally,  and  not  least  among  the  objections,  there  was  the 
ultimate  horizontal  rate  of  20  per  cent. — a  crude  and 
indiscriminating  method  of  dealing  with  the  tariff  prob- 
lem, which  can  be  defended  on  no  ground  of  principle  or 
expediency.  The  20  per  cent,  rate,  according  to  the 
terms  of  the  act,  was  to  remain  in  force  indefinitely,  that 
being  the  concession  which  in  the  end  was  made  to  the 
extremists  of  the  South.1 

As  it  happened,  however,  the  20  per  cent,  duty  remained 
in  force  for  but  two  months,  from  July  I  till  September 
i,  1842."  At  the  latter  date  the  tariff  act  of  1842  went 

(and  they  did  change  greatly),  the  rates  under  the  Compromise  Act  would 
vary  materially  from  those  given  in  the  text  ;  since  the  ad  valorem  equiva- 
lent of  the  specific  duty,  and  its  excess  over  20  per  cent. ,  were  ascertained 
for  each  year  according  to  the  prices  of  that  year. 

1  Clay,  who  drafted  the  act,  probably  had  no  expectation  that  the  20  per 
7ent.  rate  ever  would  go  into  effect.  He  thought  Congress  would  amend 
before  1842,  and  intended  to  meet  by  his  compromise  the  immediate  emer- 
gency only.  See  his  "  Works,"  vol.  II.,  pp.  131,  132.  He  tried  to  show 
\ppleton  and  Davis,  two  leading  representatives  of  the  protectionists,  that 
"  no  future  Congress  would  be  bound  by  the  act."  See  Appleton's  speech 
on  the  Tariff  Act  of  1842,  "  Appendix  to  Cong.  Globe,"  1841-42,  p.  575. 

3  The  Compromise  Act  was  so  loosely  constructed  that  doubt  was  enter- 
tained whether  under  its  terms  any  duties  at  all  could  be  collected  after 
June  30,  1842.  The  point  was  carried  before  the  Supreme  Court,  which 
iecided,  however,  that  the  rate  of  20  per  cent,  was  in  effect  during  the  two 


THE    TARIFF,    1830-1860.  113 

into  force.  That  act  was  passed  by  the  Whigs  as  a  party 
measure,  and  its  history  is  closely  connected  with  the 
political  complications  of  the  time.  The  Whigs  had 
broken  with  President  Tyler,  and'had  a  special  quarrel 
with  him  as  to  the  distribution  among  the  States  of  the 
proceeds  of  the  public  lands.  Tyler  vetoed  two  successive 
tariff  bills  because  of  clauses  in  them  in  regard  to  distri- 
bution. The  bill  which  he  finally  signed,  and  which 
became  law,  was  passed  hurriedly,  without  the  distribution 
clause.  Attention  was  turned  mainly  to  the  political  quar- 
rel and  to  the  political  effect  of  the  bill  in  general.1  The 
act,  naturally  enough,  was  a  hasty  and  imperfect  measure, 
of  which  the  details  had  received  little  consideration. 
The  duties  which  it  levied  were  high, — probably  higher 
than  they  would  have  been  had  the  tariff  discussion  been 
less  affected  by  the  breach  between  Tyler  and  the  Whigs* 
Though  distinctively  protective,  and  proclaimed  to  be 
such  by  the  Whigs,  it  had  not  such  a  strong  popular 
feeling  behind  it  as  had  existed  in  favor  of  the  protective 
measures  of  1824,  1828,  and  1832.  In  the  farming  States 
the  enthusiasm  for  the  home-market  idea  had  cooled  per- 
ceptibly ;  and  in  the  manufacturing  States  the  agitation 
came  rather  from  the  producers  directly  interested  than 

months  before  the  act  of  1842  went  in  force.  (Aldridge  vs.  Williams,  3 
Howard,  9.)  Justice  McLean  dissented  ;  and  there  is  much  force  to  his 
dissenting  opinion  and  to  the  argument  of  Reverdy  Johnson,  the  counsel 
against  the  government. 

1  A  full  account  of  this  struggle  is  in  Von  Hoist's  "  Constitutional  His- 
tory," vol.  III.,  pp.  451-463. 


114  THE    TARIFF,    1830-1860. 

from  the  public  at  large.  There  is  much  truth  in  Cal- 
houn's  remark  that  the  act  of  1842  was  passed,  not  so 
much  in  compliance  with  the  wishes  of  the  manufacturers 
is  because  the  politicians  wanted  an  issue.1 

The  act  of  1842  remained  in  force  for  but  four  years. 
It  was  in  turn  superseded  by  the  act  of  1846,  again  a 
political  measure,  passed  this  time  by  the  Democrats. 
The  act  of  1846  carried  out  the  suggestions  made  by 
Secretary  Walker  in  his  much  debated  Treasury  Report 
of  1845.  Indeed,  it  may  be  regarded  as  practically  framed 
by  Walker,  who  professed  to  adhere  to  the  principle  of 
free  trade  ;  and  the  act  of  1846  is  often  spoken  of  as  an 
instance  of  the  application  of  free-trade  principles.  In 
fact,  however,  it  effected  no  more  than  a  moderation  in 
the  application  of  protection.  The  act  established  several 
schedules,  indicated  by  the  letters  A,  B,  C,  D,  and  so  on. 
All  the  articles  classed  in  schedule  A  paid  100  per  cent., 
all  in  schedule  B  paid  40  per  cent.,  all  in  schedule  C  paid 
30  per  cent.,  and  so  on  for  the  rest.  Schedule  C,  with  the 
30  per  cent,  duty,  included  most  articles  with  which  the 
protective  controversy  is  concerned, — iron  and  metals  in 
general,  manufactures  of  metals,  wool  and  woollens,  man- 
ufactures of  leather,  paper,  glass,  and  wood.  Cottons 
were  in  schedule  D,  and  paid  25  per  cent.  Tea  and  coffee, 
on  the  other  hand,  were  exempt  from  duty. 

1  "  Works,"  vol.  IV.,  pp.  199,  200.  Calhoun  thought  that  a  good  deal 
was  due  also  to  the  influence  of  the  "moneyed  men"  who  wanted  the 
Treasury  to  be  filled. 


THE    TARIFF,    1830-1860.  115 

The  act  of  1846  remained  in  force  till  1857,  when  a  still 
further  reduction  of  duties  was  made.  The  revenue  was 
redundant  in  1857,  an<^  tm?s  was  tne  chief  cause  of  the 
reduction  of  duties.  The  measure  of  that  year  was  passed 
with  little  opposition,  and  was  the  first  tariff  act  since 
1816  that  was  not  affected  by  politics.1  It  was  agreed  on 
all  hands  that  a  reduction  of  the  revenue  was  imperatively 
called  for,  and,  except  from  Pennsylvania,  there  was  no 
opposition  to  the  reduction  of  duties  made  in  it.  The 
framework  of  the  act  of  1846  was  retained, — the  schedules 
and  the  ad  valorem  duties.  The  duty  on  the  important 
protective  articles,  in  schedule  C,  was  lowered  to  24  per 
cent.,  cottons  being  transferred,  moreover,  to  that  sched- 
ule. Certain  raw  materials  were  at  the  same  time  admitted 
free  of  duty. 

The  act  of  1857  remained  in  force  till  the  close  of  the 
period  we  now  have  under  examination.  We  begin  with 
a  high  protective  tariff  in  1832  ;  then  follows  a  gradual 
reduction  of  duties,  ending  in  1842  with  a  brief  period  of 
very  low  duties.  In  the  four  years  1842-46  we  have  a 
strong  application  of  protection.  In  1846  begins  what  is 
often  called  a  period  of  free  trade,  but  is  in  reality  one  of 
moderated  protection.  In  1857  the  protection  is  still  fur- 
ther moderated,  and  for  a  few  years  there  is  as  near  an 
approach  to  free  trade  as  the  country  has  had  since  1816. 

1  Seward  said,  in  1857,  that  "  the  vote  of  not  a  single  Senator  will  be 
governed  by  any  partisan  consideration  whatever."  Appendix  to  "  Con- 
gressional Globe,"  1856-57,  p.  344  ;  and  see  Hunter's  speech,  ibid.^  p.  331. 


Il6  THE    TARIFF,    1830-1860. 

Turning  now  to  the  economic  effect  of  this  legislation, 
we  have  to  note,  first,  its  connection  with  the  general 
prosperity  of  the  country.  That  there  was  a  distinct 
connection  is  asserted  by  both  protectionists  and  free  trad- 
ers. The  protectionists  tell  us  that  the  compromise  tariff 
caused  the  disastrous  crises  of  1837  and  1839  5  tnat  tne 
high  tariff  of  1842  brought  back  prosperity  ;  that  depres- 
sion again  followed  the  passage  of  the  act  of  1846,  and 
that  the  panic  of  1857  was  precipitated  by  the  tariff  act 
of  1857.  On  the  other  hand,  free  traders  not  infrequently 
describe  the  period  between  1846  and  1860  as  one  of  ex- 
ceptional prosperity,  due  to  the  low  duties  then  in  force. 

It  would  not  be  worth  while  to  allude  to  some  of  these 
assertions,  if  they  were  not  so  firmly  imbedded  in  current 
literature  and  so  constantly  repeated  in  many  accounts  of 
our  economic  history.  This  is  especially  the  case  with 
the  curious  assertion  that  the  crises  of  1837  and  1839  were 
caused  by  the  compromise  tariff  of  1833,  or  connected 
with  it.  This  assertion  had  its  origin  in  the  writings  of 
Henry  C.  Carey,  who  has  been  guilty  of  many  curious 
versions  of  economic  history,  but  of  none  more  remarka- 
ble than  this.  It  may  be  found  in  various  passages  in  his 
works;  and  from  them  it  has  been  transferred  to  the 
writings  of  his  disciples  and  to  the  arguments  of  protec- 
tionist authors  and  speakers  in  general.1  Yet  no  fair- 

1  References  to  the  supposed  effects  of  the  act  of  1833  abound  in  Carey's 
works.  As  good  a  specimen  as  any  is  this  :  "Agitation  succeeded  in  pro- 
ducing a  total  change  of  system  in  the  tariff  of  1833.  *  *  *  Thencefor 


THE    TARIFF,    1830-1860. 

minded  person,  having  even  a  superficial  knowledge  of 
the  economic  history  of  these  years,  can  entertain  such 
notions.  The  crises  of  1837  and  1839  were  obviously  due 
to  quite  a  different  set  of  causes — to  the  bank  troubles, 
the  financial  mistakes  of  Jackson's  administration,  the  in- 
flation of  the  currency,  and  to  those  general  conditions  of 
speculation  and  unduly  expanded  credit  which  give  rise 
to  crises.  The  tariff  act  had  nothing  whatever  to  do  with 
them.  Indeed,  the  reductions  in  duty  under  it,  as  we  have 

ward  the  building  of  furnaces  and  mills  almost  wholly  ceased,  the  wealthy 
English  capitalists  having  thus  succeeded  in  regaining  the  desired  control  of 
the  great  American  market  for  cloth  and  iron.  As  a  consequence  of  their 
triumph  there  occurred  a  succession  of  crises  of  barbaric  tendency,  the 
whole  terminating,  in  1842,  in  a  scene  of  ruin  such  as  had  never  before  been 
known,  bankruptcy  among  the  people  being  almost  universal,"  etc.  "  Let- 
ters on  the  Iron  Question  "  (1865),  p.  4,  printed  in  his  "Miscellaneous 
Works  "  (1872).  To  the  same  effect,  see  his  "  Financial  Crises,"  p.  18  ; 
"Review  of  Wells'  Report,"  p.  5;  "  Social  Science,"  II.,  p.  225.  Professor 
Thompson  makes  the  same  statement  in  his  "  Political  Economy,"  p.  353. 
See  also  Elder,  "Questions  of  the  Day"  (1871),  pp.  200,  201.  Senator 
Evarts,  in  a  speech  made  in  1883,  ascribed  to  the  act  of  1833  "  a  bank- 
ruptcy which  covered  the  whole  land,  without  distinction  of  sections,  with 
ruin."  The  pedigree  of  statements  of  this  kind,  which  are  frequent  in  cam- 
paign literature,  can  be  traced  back  to  Carey.  Doubtless  Carey  wrote  in 
good  faith  ;  but  his  prejudices  were  so  strong  as  to  prevent  him  from  taking 
a  just  view  of  economic  history. 

Oddly  enough,  Calhoun  ascribed  the  crisis  of  1837  to  the  fact  that  duties 
under  the  act  of  1833  remained  too  high.  The  high  duties  brought  in  a  large 
revenue  and  caused  a  surplus  in  the  Treasury  ;  the  deposit  and  distribution 
of  this  brought  inflation  and  speculation,  and  eventually  a  crisis  ("  Works," 
T.V.,  p.  174).  No  doubt  the  high  duties  were  one  cause  of  the  government 
surplus,  and  thereby  aided  in  bringing  about  the  crisis,  so  that  this  view, 
incomplete  as  it  is,  has  more  foundation  than  Carey's  explanation.  On  the 
other  hand,  Clay,  as  might  be  expected,  took  pains  to  deny  that  the  act  of 
1833  had  any  thing  to  do  with  the  troubles  of  the  years  following  its  passage 
f"  Works,"  II.,  pp.  530,  531  ;  edition  of  1844). 


118  THE    TARIFF,    1830-1860. 

seen,  were  slight  until  1840,  and  could  hardly  have  influ- 
enced in  any  degree  the  breaking  out  of  the  panics.  Even 
if  the  reductions  of  duty  had  been  greater,  and  had  been 
made  earlier,  they  would  probably  have  had  no  effect, 
favorable  or  unfavorable,  on  the  inflation  of  the  earlier 
years  or  on  the  depression  which  followed. 

We  may  dispose  at  this  point  of  a  similar  assertion  oc- 
casionally made  in  regard  to  the  crisis  of  1857, — that  the 
tariff  act  of  1857  caused  or  intensified  it.  This  view  also 
is  traceable,  probably,  to  Carey.  It  appears  in  his  writ- 
ings and  in  those  of  his  disciples.1  In  fact,  the  crisis  of 
1857  was  an  unusually  simple  case  of  activity,  speculation, 
over-banking,  panic,  and  depression ;  and  it  requires  the 
exercise  of  great  ingenuity  to  connect  it  in  any  way  with 
the  tariff  act.  As  it  happened,  indeed,  the  tariff  was 
passed  with  some  hope  that  it  would  serve  to  prevent  the 
crisis.  Money  was  accumulating  in  the  Treasury  ;  and  it 
was  hoped  that  by  reducing  duties  the  revenue  would  be 
diminished,  money  would  be  got  out  of  the  Treasury,  and 
the  stringency,  which  was  already  threatening,  prevented.2 


1  Carey  speaks  in  one  place  of  "the   terrific  free-trade  crisis  of  1857." 
"  Letters  to  Colfax,"  p.  15  ;   "  Financial  Crises,"  p.  8  ;  "  Review  of  Wells," 
p.  5  (all  in  his  "  Miscellaneous  Works").     Thompson  ("Political  Econ- 
omy," p.  357)  says  :   "  In  1857,  Congress  reduced  the  duties  twenty-five  per 
cent.    *    *    *    It  at  once  intensified  all  the  unwholesome  tendencies  in  our 
commercial  and  industrial  life.     *     *     *     Another   great   panic  followed 
through  the  collapse  of  unsound  enterprises." 

2  See  a  letter  from  a  Boston  merchant  to  Senator  Wilson,  "Congr.  Globe, 
1856-57,  Appendix,"    p.    344  ;    and    the  statement   by   Senator    Hunter 
ibid.,  329. 


THE    TARIFF,    1830-1860.  119 

The  reduction  failed  to  prevent  the  panic  ;  but,  at  the 
time,  it  would  have  been  considered  very  odd  to  ascribe 
the  disaster  to  the  tariff  act.  y 

On  the  other  hand,  it  has  been  very  often  said  that  the 
activity  of  trade  in  1843-44  was  due  to  the  enactment  of 
the  protective  tariff  act  of  1842.  There  may  be  a  degree 
of  truth  in  this.  The  unsettled  state  of  legislation  on  the 
tariff  before  the  act  of  1842  was  passed  must  have  been  an 
obstacle  to  the  revival  of  confidence.  After  July  I,  1842, 
there  was  the  uniform  duty  of  20  per  cent.  ;  nay,  it  was 
doubtful  whether  there  was  by  law  even  that  duty  in 
force.  It  was  certain  that  Congress  would  wish  not  to 
retain  the  horizontal  rate,  but  would  try  to  enact  a  new 
tariff  law  ;  yet  the  quarrel  between  the  Whigs  and  Tyler 
made  the  issue  quite  doubtful.  Such  uncertainty  neces- 
sarily operated  as  a  damper  on  trade ;  and  the  passage  of 
any  act  whatever,  settling  the  tariff  question  for  the  time 
being,  would  have  removed  one  great  obstacle  to  the  re- 
turn of  activity  and  prosperity.  It  is  even  possible  that 
the  passage  of  the  act  of  1842  may  have  had  a  more  direct 
effect  than  this.  No  doubt,  in  the  regular  recurrence  of 
waves  of  activity  and  depression,  the  depression  of  1840- 
42  would  soon  have  been  followed,  in  any  event,  by  a 
period  of  activity.  The  point  at  which  activity  will  begin 
to  show  itself  under  such  circumstances  is  largely  a  mat- 
ter of  chance.  It  begins,  for  some  perhaps  accidental 
reason,  with  one  industry  or  set  of  industries,  and,  the 
materials  for  general  revival  being  ready,  then  spreads 


I2O  THE    TARIFF,    1830-1860. 

quickly  to  the  others.  In  the  same  way,  when  the  mate, 
rials  for  a  crisis  are  at  hand,  a  single  accidental  failure 
may  precipitate  a  general  panic.  In  1842-43  the  high 
duties  of  the  tariff  act  probably  helped  to  make  profits 
large  for  the  time  being  in  certain  manufactures,  notably 
those  of  cotton  and  iron.  Prosperity  in  these  set  in,  and 
may  have  been  the  signal  for  a  general  revival  of  confi- 
dence and  for  a  general  extension  of  business  operations. 
To  that  extent,  it  is  not  impossible  that  the  protective 
tariff  of  1842  was  the  occasion  of  the  reviving  business 
of  the  ensuing  years.  But  it  is  a  very  different  thing 
from  this  to  say  that  the  tariff  was  the  cause  of 
prosperity,  and  that  depression  would  have  continued 
indefinitely  but  for  the  re-establishment  of  high  protec- 
tive duties. 

In  truth,  there  has  been  a  great  deal  of  loose  talk  about 
tariffs  and  crises.  Whenever  there  has  been  a  crisis,  the 
free  traders  or  protectionists,  as  the  case  may  be,  have 
been  tempted  to  use  it  as  a  means  for  overthrowing  the 
system  they  opposed.  Cobden  found  in  the  depression  of 
1839—40  a  powerful  argument  in  his  crusade  against  the 
corn  laws,  and  knew  that  a  return  of  prosperity  would 
work  against  him.1  Within  a  few  years,  the  opponents 
of  protection  in  this  country  have  found  in  general  de- 
pression a  convenient  and  effective  argument  against  the 
tariff.  In  the  same  way,  the  protectionists  have  been 
tempted  to  use  the  crises  of  1837  and  l$$7>  an<^  conversely 

1  See  passages  in  Morley's  "  Life  of  Cobden,"  pp.  162.  163,  210. 


THE    TARIFF,    1830-1860.  121 

the  revival  of  1843-44,  to  help  their  case.  But  the  effect 
of  tariffs  cannot  be  traced  by  any  such  rough-and-ready 
method.  The  tariff  system  of  a/country  is  but  one  of 
many  factors  entering  into  its  general  prosperity.  Its 
influence,  good  or  bad,  may  be  strengthened  or  may  be 
counteracted  by  other  causes  ;  while  it  is  exceedingly  diffi- 
cult, generally  impossible,  to  trace  its  separate  effect. 
Least  of  all  can  its  influence  be  traced  in  those  varia- 
tions of  outward  prosperity  and  depression  which  are 
marked  by  "  good  times  "  and  crises.  A  protective  tariff 
may  sometimes  strengthen  other  causes  which  are  bring- 
ing on  a  commercial  crisis.  Some  such  effect  is  very 
likely  traceable  to  the  tariff  in  the  years  before  the  crisis 
of  1873.  It  may  sometimes  be  the  occasion  of  a  revival 
of  activity,  when  the  other  conditions  are  already  favora- 
ble to  such  a.  revival.  That  may  have  been  the  case 
in  1843.  But  these  are  only  incidental  effects,  and  lie 
quite  outside  the  real  problem  as  to  the  -results  of  pro- 
tection. As  a  rule,  the  tariff  system  of  a  country 
operates  neither  to  cause  nor  to  prevent  crises.  They 
are  the  results  of  conditions  of  exchange  and  produc- 
tion on  which  it  can  exercise  no  great  or  permanent 
influence. 

Remarks  of  the  same  kind  may  be  made  on  the  fre- 
quent assertion  that  the  prosperity  of  the  country  from 
1846  to  1860  can  be  traced  to  the  low  duties  then  in 
force.  He  who  is  convinced,  on  grounds  of  general  rea- 
soning and  of  general  experience,  that  the  principles  of 


122  THE    l^ARIFF,    1830-1860. 

free  trade  are  sound  and  that  protective  duties  are  harm- 
ful, can  fairly  deduce  the  conclusion  that  the  low  tariffs 
of  1846  and  1857  contributed,  so  far  as  they  went,  to  gen- 
eral prosperity.  But  a  direct  connection  cannot  be  traced. 
A  number  of  favorable  causes  were  at  work,  such  as  the 
general  advance  in  the  arts,  the  rapid  growth  of  the  rail- 
way system  and  of  ocean  communication,  the  Californian 
gold  discoveries.  There  is  no  way  of  eliminating  the 
other  factors,  and  determining  how  much  can  be  ascribed 
to  the  tariff  alone.  Even  in  the  growth  of  international 
trade,  where  some  direct  point  of  connection  might  be 
found,  we  cannot  measure  the  effect  of  low  duties ;  for 
international  trade  was  growing  between  all  countries 
under  the  influence  of  cheapened  transportation  and  the 
stimulus  of  the  great  gold  discoveries.1  The  inductive, 
or  historical,  method  absolutely  fails  us  here. 


1  The  growth  of  foreign  trade  under  the  tariffs  of  1846  and  1857  was  cer- 
tainly very  striking.  In  Grosvenor's  "  Does  Protection  Protect  ?  "  there  is 
a  table  showing  the  imports  and  exports  per  head  of  population  from  1821 
to  1869,  in  which  it  is  stated  that  the  annual  average  per  head  of  popula- 
tion was  : 

Imports.  Exports. 

In  1843-46,  $4.66  $5.22 

"   1847-50,  6.35  6.32 

"   1851-55,  9.10  7.35 

"  1856-60,  10.41  9.45 

The  imports  and  exports  were,  in  millions  of  dollars  : 

Imports.      Exports. 
Annual  average  of  the  four  years  1843-46,  92.7  100 

"     "      "       "     1847-50,  138.3  136.8 

"  "         "     "    five      "     1851-55,  231.  186.2 

'«  '     "       "        "     1856-60,  305.  278.2 

Pmt  how  are  we  to  measure  the  share  which  low  duties  had  in  promoting 
this  growth  ? 


THE    TARIFF,    1830-1860.  123 

We  turn  now  to  another  inquiry,  as  to  the  effect  of  the 
fluctuating  duties  of  this  period  on  the  protected  indus- 
tries. That  inquiry,  it  is  hardly  necessary  to  say,  leads  us 
to  no  certain  conclusion  as  to  the  effect  of  the  duties  on 
the  welfare  of  the  country  at  large.  It  is  quite  conceiv- 
able, and  indeed  on  grounds  of  general  reasoning  at  least 
probable,  that  any  stimulus  given  to  the  protected  indus- 
tries indicated  a  loss  in  the  productive  powers  of  the  com- 
munity as  a  whole.  But  it  has  often  been  asserted,  and 
again  often  denied,  that  the  duties  caused  a  growth  of 
certain  industries ;  and  it  is  worth  while  to  trace,  if  we 
can,  the  tangible  effect  in  this  direction,  even  though  it 
be  but  a  part  of  the  total  effect. 

It  is  the  production  of  iron  in  the  unmanufactured  form 
that  has  been  most  hotly  discussed  in  the  protective  con- 
troversy. And  in  regard  to  this,  fortunately,  we  have 
good,  if  not  complete,  information. 

The  duty  on  pig-iron  had  been  62^  cents  a  hundred- 
weight under  the  tariff  act  of  1828.  In  1832  it  was  re- 
duced  to  50  cents,  or  $10  per  ton.  This  rate  was  equiva- 
lent to  about  40  per  cent,  on  the  foreign  price  at  that 
time;  and,  under  the  Compromise  Act  of  1833,  it  was 
gradually  reduced,  until  it  reached  20  per  cent,  in  1842. 
Under  the  act  of  1842,  the  duty  was  again  raised  to  $10  a 
ton.  In  1846  it  was  made  30  per  cent,  on  the  value,  and 
in  1857  24  per  cent.  As  the  value  varied,  the  duty  under 
the  last  two  acts  varied  also.  In  1847,  a  time  of  high 
prices,  the  duty  of  30  per  cent,  was  equal  to  $5.75  per 


124 


THE    TARIFF,    1830-1860. 


ton  ;  in  1852  it  was  only  $3.05  ;  in  1855  it  was  as  high  as 
$6;  \n  1860  it  again  fell  to  $3.40.' 

The  duty  on  bar-iron  was  of  two  kinds  until  1846, — a 
duty  on  hammered  bar-iron,  and  another  heavier  duty  on 
rolled  bar-iron.  The  duty  on  hammered  bar  was,  in  1832, 
fixed  at  90  cents  per  hundredweight,  or  $18  per  ton. 
That  on  rolled  bar  was  nearly  twice  as  heavy,  being  $30 
per  ton,  or  nearly  100  per  cent,  on  the  value.  These  duties 
were  reduced  under  the  Compromise  Act ;  and,  as  we 
have  seen,  the  reduction  on  rolled  bar  was  very  great, 
and,  in  1842,  very  sudden.  Under  the  act  of  1842,  the 
duty  on  hammered  bar  was  made  $17  per  ton,  that  on 
rolled  bar  $25  per  ton.  The  act  of  1846  gave  up  finally 
the  discrimination  between  the  two  kinds,  and  admitted 


1  The  duty  from  year  to  year,  on  the  average,  for  the  fiscal  years  ending 
June  3Oth,  is  given  in  the  following  table.  The  foreign  value,  on  which  the 
duty  was  computed,  is  also  given.  The  figures  are  compiled  from  the  tables 
given  in  French,  "  History  of  Iron  Manufacture,"  p.  70,  and  in  the  "  Re- 
port of  the  Iron  and  Steel  Association  for  1876,"  p.  182. 

Duty 
(30  per  cent,  till  1857, 


VTear  ending  June  3oth.                      Average  value.                      24  per  cent,  aft 

1847 

$r9.9o 

$5-95 

1848 

15.80 

4-75 

1849 

I3-30 

4.00 

1850 

12.70 

3.80 

1851 

12.60 

3-75 

1852 

IO.2O 

3-05 

1853 

13-40 

4.00 

1854 

18.00 

5.40 

1855 

2O.OO 

6.00 

1856 

19.80 

5-95 

1857 

19.50 

5-85 

1858 

17.60 

4.20 

1859 

15.20 

3.65 

1860 

14.10 

3.40 

THE    TARIFF,    1830-1860. 

both  alike  at  a  duty  of  30  per  cent. ;  and  the  act  of  1857 
admitted  them  at  24  per  cent.1 

Before  proceeding  to  examine  the  economic  effect  of 
these  duties,  it  should  be  said  that  our  information  as  to 
the  production  of  iron  is  in  many  ways  defective,  and 
that  the  statements  relating  to  it  in  the  following  para- 
graphs cannot  be  taken  to  be  more  than  rp^ughly  accurate. 
The  government  figures  give  us  trustworthy  information 
as  to  the  imports ;  but  for  the  domestic  production  we 
must  rely,  at  least  for  the  earlier  years,  on  estimates 
which  are  often  no  more  than  guesses.  Nevertheless,  the 
general  trend  of  events  can  be  made  out  pretty  clearly, 
and  we  are  able  to  draw  some  important  conclusions." 

It  seems  to  be  clear  that  the  importation  of  iron  was 
.somewhat  affected  by  the  duties.  The  years  before  1842, 
when  the  compromise  tariff  was  in  force,  were  years  of 
such  disturbance  that  it  is  not  easy  to  trace  any  effects 
clearly  to  the  operation  of  the  tariff ;  but  imports  during 
these  years  were  a  smaller  proportion  of  the  total  con- 
sumption of  iron  than  they  were  during  the  period  after 


1  Between  1832  and  1842,  an  exception  had  been  made  for  one  class  of 
rolled  iron, — iron  rails  actually  laid  down  on  railroads.  These  were  ad- 
mitted free  of  duty  ;  or,  rather,  a  drawback  was  granted  of  the  full  amount 
of  duty  due  or  paid  on  them.  Between  1828  and  1832,  a  drawback  had 
been  granted  such  as  to  make  the  duty  on  railroad  iron  only  25  per  cent. 
After  1842,  however,  it  was  charged  with  duty  like  any  other  iron. 

5  The  reader  who  wishes  to  examine  further  the  data  as  to  the  production 
of  iron  before  1860,  is  referred  to  the  Appendix  to  the  Quarterly  Journal  of 
Economics  for  April,  1888,  vol.  II.,  pp.  377-382,  where  I  have  considered 
the  figures  in  detail. 


126  THE    TARIFF,    1830-1860. 

1846.  It  must  be  remembered  that  from  1830  till  1842 
all  railroad  iron  was  admitted  free  of  duty,  and  that  a 
large  part  of  the  imported  iron  consisted  of  rails.  If  this 
quantity  be  deducted  from  the  total  import,  the  remaining 
quantity,  which  alone  was  affected  by  the  duties,  becomes 
still  smaller  as  compared  with  the  domestic  product.  In 
1841  and  1842,  when  duties  began  to  be  low  under  the 
operation  of  the  Compromise  Act,  imports  were  larger  in 
proportion  to  the  home  product.  On  the  other  hand,  in 
the  four  years,  1843-46,  under  the  act  of  1842,  they  show 
a  distinct  decrease.  After  1847,  they  show  as  distinct  an 
increase,  and  continue  to  be  large  throughout  the  period 
until  1860.  In  the  speculative  and  railroad-building  years, 
from  1852  to  1857,  the  importation  was  especially  heavy  ; 
and  in  1853  and  1854  the  total  quantity  of  iron  imported 
was  almost  as  great  as  the  home  product. 

The  most  effective  part  of  the  iron  duties  until  1846 
was  the  heavy  discriminating  duty  on  rolled  bar-iron. 
That  duty  amounted  (from  1818  till  1846,  except  during 
a  few  months  in  1842)  to  about  100  per  cent.  Rolled 
iron,  made  by  the  puddling  process  and  by  rolling,  is  the 
form  of  bar-iron  now  in  common  use.  The  process  was 
first  applied  successfully  by  Cort  in  England  about  1785, 
and  in  that  country  was  immediately  put  into  extensive 
use.  It  made  bar-iron  much  more  cheaply  and  plentifully 
than  the  old  process  of  refining  in  a  forge  and  under  a 
hammer ;  and,  at  the  present  time,  hammered  bar  of  the 
old-fashioned  kind  has  ceased  to  be  made,  except  in  com- 


THE    TARIFF,    1830-1860.  I2/ 

paratively  small  quantities  for  special  purposes.  Cort's 
processes  of  puddling  and  rolling  were  practicable  only 
through  the  use  of  bituminous  coal  and  coke.  The 
abundant  and  excellent  coal  of  Gfeat  Britain  gave  that 
country  an  enormous  advantage  in  producing  rolled  iron, 
as  it  had  already  done  in  smelting  pig-iron,  and  put  her  in 
that  commanding  position  as  an  iron  producer  which  she 
continues  to  occupy  to  the  present  day.  When  rolled 
iron  first  began  to  be  exported  from  England  to  foreign 
countries,  it  aroused  strong  feelings  of  jealousy,  being  so 
much  cheaper  than  other  iron.  Several  countries  fought 
against  the  improvement  by  imposing  discriminating 
duties  on  it.1  That  course  was  adopted  in  the  United 
States.  In  1818,  a  discriminating  duty  was  put  on  rolled 
iron,  partly  because  it  was  said  to  be  inferior  in  quality  to 
hammered  iron,  and  partly  from  a  feeling  in  favor  of  pro- 
tecting the  domestic  producers  of  hammered  iron.  The 
duty  was  retained,  as  we  have  seen,  till  1846.  Its  effect 
was  neutralized  in  part  by  the  free  admission  of  railroad 
iron,  which  was  one  form  of  rolled  iron ;  but,  so  far  as  it 
was  applied  to  rolled  iron  in  general,  it  simply  prevented 
the  United  States  from  sharing  the  benefit  of  a  great  im- 
provement in  the  arts.  It  had  no  effect  in  hastening  the 
use  of  the  puddling  and  rolling  processes  in  the  country. 
Though  introduced  into  the  United  States  as  early  as 

1  In  France  a  discriminating  duty  equivalent  to  120  per  cent,  was  im- 
posed in  1833  on  iron  imported  by  sea,  i.  e.,  on  English  iron.  Ame, 
"Tarifsde  Douanes,"  I.,  144,  145.  The  discrimination  was  maintained 
until  1855.  Ibid.,  271. 


128  THE    TARIFF,    1830-1860. 

1817,  these  processes  got  no  firm  hold  until  after  anthra- 
cite coal  began  to  be  used,  about  1840,  as  an  iron-making 
fuel.1 

We  turn  now  to  the  history  of  the  domestic  production. 
By  far  the  most  important  event  in  that  history  is  the  use 
of  anthracite  coal  as  a  fuel,  which  began  about  1840. 
The  substitution  of  anthracite  for  wood  (charcoal)  revo- 
lutionized the  iron  trade  in  the  United  States  in  the  same 
way  as  the  use  of  bituminous  coal  (coke)  had  revolution- 

1  The  first  puddling  and  rolling  mill  in  the  United  States  was  put  up  in 
Pennsylvania  in  1817.  The  first  puddling  in  New  England  was  done  as 
late  as  1835.  Wood  was  used  as  fuel  at  the  outset.  Swank,  "  Iron  in  All 
Ages,"  166,  330.  The  effect  of  the  duty  on  rolled  iron  cannot  be  better 
described  than  in  the  clear  and  forcible  language  used  by  Gallatin  in  1831 ; 
' '  It  seems  impracticable  that  iron  made  with  charcoal  can  ever  compete 
with  iron  made  from  bituminous  coal.  *  *  *  A  happy  application  of 
anthracite  coal  to  the  manufacture  of  iron,  the  discovery  of  new  beds  of 
bituminous  coal,  the  erection  of  iron-works  in  the  vicinity  of  the  most  East- 
erly beds  now  existing,  and  the  improved  means  of  transportation,  which 
may  bring  this  at  a  reasonable  rate  to  the  sea-border,  may  hereafter  enable 
the  American  iron-master  to  compete  in  cheapness  with  foreign  rolled  iron 
in  the  Atlantic  districts.  On  those  contingencies  the  tariff  can  have  no 
effect.  To  persist,  in  the  present  state  of  the  manufacture,  in  that  particu- 
lar competition,  and  for  that  purpose  to  proscribe  the  foreign  rolled  iron,  is 
to  compel  the  people  for  an  indefinite  time  to  substitute  a  dear  for  a  cheap 
article.  It  is  said  that  the  British  iron  is  generally  of  inferior  quality  ;  this 
is  equally  true  of  a  portion  of  that  made  in  America.  In  both  cases  the 
consumer  is  the  best  judge, — has  an  undoubted  right  to  judge  for  himself. 
Domestic  charcoal  iron  should  confine  itself  to  a  competition  with  the  for- 
eign iron  made  from  the  same  fuel."  Gallatin  added,  prophetically  : 
' '  Your  memorialists  believe  that  the  ultimate  reduction  of  the  price  of 
American  iron  to  that  of  British  rolled  iron  can  only,  and  ultimately  will, 
be  accomplished  in  that  Western  region  which  abounds  with  ore,  and  in 
which  are  found  the  most  extensive  formations  of  bituminous  coal." — 
"  Memorial  of  the  Free-Trade  Convention,"  pp.  60,  61. 


THE    TARIFF,    1830-1860.  I2Q 

ized  the  English  iron  trade  nearly  a  century  before.     Up 
to  1840,  pig-iron  had  been  smelted  in  this  country  with 

charcoal,  a  fuel  which  was  expensive,  and  tended  to  be- 

"/  ~t 
come  more  and  more  expensive  as  the  nearer  forests  were 

cut  down  and  wood  became  less  easily  attainable.  Char- 
coal pig-iron  could  not  have  competed  on  even  terms  with 
the  coal-made  English  iron.  But  between  1830  and  1840 
it  was  protected  by  the  heavy  duties  on  English  iron  ; 
and,  under  their  shelter,  the  production  in  those  years 
steadily  increased.  There  seems  to  be  no  doubt  that, 
with  lower  duties  or  no  duties  at  all,  the  domestic 
production  would  have  been  less,  and  the  import  greater. 
In  other  words,  the  duty  operated  as  a  true  protective 
duty,  hampering  international  trade  and  increasing  the 
price  of  the  home  product  as  well  as  of  the  imported  iron. 
In  1840,  however,  anthracite  coal  began  to  be  applied 
to  the  making  of  pig-iron.  The  use  of  anthracite  was 
made  possible  by  the  hot  blast, — a  process  which  was  put  in 
successful  operation  in  England  at  nearly  the  same  time.1 
The  importance  of  the  new  method  was  immediately 
appreciated,  and  predictions  were  made  that  henceforth 
there  would  be  no  longer  occasion  for  importing  iron, 
even  under  the  20  per  cent,  duty  of  the  Compromise  Act. 
Many  furnaces  were  changed  trom  the  charcoal  to  the 

1  The  hot  blast  was  successfully  applied  in  a  furnace  in  Pennsylvania  in 
1835,  but  the  experiment  was  not  prosecuted.  In  1837,  Crane  applied  it 
in  Wales,  and  about  the  same  time  the  process  was  successfully  used  in 
this  country.  Swank,  "Iron  in  All  Ages,"  268-273  >  French,  "History 
of  the  Iron  Trade,"  58-60., 


130  THE    TARIFF,    1830-1860. 

anthracite  method.1  At  very  nearly  the  same  time,  as  it 
happened,  the  tariff  act  of  1842  was  passed,  imposing 
heavy  duties  on  all  kinds  of  iron,  among  others  on  the 
railroad  iron  which  had  hitherto  been  admitted  free. 
Very  shortly  afterwards  a  general  revival  of  trade  set  in. 
Under  the  influence  of  these  combined  causes,  the  pro- 
duction of  iron  was  suddenly  increased.  The  exact 
amount  of  the  increase  is  disputed ;  but  the  production 
seems  to  have  risen  from  somewhere  near  300,000  tons  in 
1840-41,  to  650,000  or  more  in  1846-47.  Some  part  of 
this  great  growth  was  certainly  due  to  the  high  protection 
of  1842  ;  but,  under  any  circumstances,  the  use  of  anthra- 
cite would  have  given  a  great  stimulus  to  the  iron  trade. 
This  is  shown  by  the  course  of  events  under  the  tariff 
acts  of  1846  and  1857.  The  production  remained,  on  the 
whole,  fairly  steady  throughout  the  years  when  these  acts 
were  in  force.  There  was,  on  the  whole,  an  increase  from 
between  500,000  and  600,000  tons  in  the  earlier  years  of 
the  period  to  between  800,000  and  900,000  tons  in  the 
later  years.  For  a  few  years  after  the  passage  of  the  act 
of  1846,  the  reduction  of  the  duty  to  30  per  cent,  had 
little,  if  any,  effect.  Prices  were  high  both  in  England 
and  in  the  United  States ;  for  it  was  a  time  of  active 
railroad  building  in  England,  and  consequently  of  great 
demand  for  iron.  The  ad  valorem  duty  was  correspond- 

1  See  the  notices  in  Hazard's  "  Statistical  Register,"  I,,  pp.  335,  368  ; 
III.,  p.  173  ;  IV.,  p.  207.  That  great  results  were  at  once  expected  from 
the  new  method  is  shown  by  an  interesting  speech  of  Nicholas  Biddle'^ 
ibid.,  II.,  p.  230. 


THE    TARIFF,    1830-1860.  131 

ingly  high.  In  1850-51  the  usual  reaction  set  in,  prices 
went  down,  production  decreased,  and  the  iron-masters 
complained.1  But  the  natural  revival  came  after  a  year 
or  two.  Prices  rose  again ;  production  increased,  and 
continued  to  increase  until  1860.  Although  the  duty, 
which  had  been  $9  a  ton  under  the  act  of  1842,  was 
no  more  than  $3  and  $4  under  the  24  per  cent,  rate 
which  was  in  force  during  the  years  1858,  1859,  an<^  I86o, 
and  although  these  were  not  years  of  unusual  general 
activity,  the  domestic  production  showed  a  steady  growth. 
The  country  was  growing  fast,  many  railroads  were  in 
course  of  construction,  much  iron  was  needed.  An  un- 
diminished  home  product  was  consumed,  as  well  as  largely 
increased  imports. 

The  most  significant  fact  in  the  iron  trade,  however,  is 
to  be  seen,  not  in  the  figures  of  total  production,  but  in 
the  shifting  from  charcoal  to  anthracite  iron.  While  the 
total  product  remained  about  the  same,  the  component 
elements  changed  greatly.  The  production  of  anthracite 

1  The  iron-masters  admitted  that  the  act  of  1846  had  been  sufficiently 
protective  when  first  passed.  But  in  1849  and  1850,  they  began  to  com- 
plain and  ask  for  higher  duties.  See  "  Proceedings  of  Iron  Convention  at 
Pittsburg  (1849),"  p.  9  ;  "  Proceedings  of  Convention  at  Albany,"  pp.  27, 
42.  They  certainly  had  a  legitimate  subject  for  complaint  in  the  operation 
of  the  ad  valorem  duty,  in  that  it  tended  to  exaggerate  the  fluctuations  of 
prices.  When  prices  abroad  were  high,  the  duty  was  high  ;  when  prices 
abroad  were  low,  the  duty  was  low.  Consequently,  the  price  of  foreign 
iron  in  the  United  States,  which  is  the  sum  of  the  foreign  price  and  the 
duty,  fluctuated  more  widely  than  the  foreign  price  alone.  This  was  cer- 
tainly an  evil,  especially  with  an  article  whose  price  was  liable  under  any 
conditions  to  vary  so  much  as  the  price  of  iron.  See  the  table  above,  p,  124. 


132  THE    TARIFF,    1830-1860. 

iron  rose  steadily :  that  of  charcoal  iron  fell  as  steadily. 
The  first  anthracite  furnace  was  built  in  1840.  In  1844 
there  were  said  to  be  twenty  furnaces,  making  65,000  tons 
annually.1  Thence  the  production  rose  with  hardly  an 
interruption  being 

in  1844  ....          65,000  gross  tons. 

"  1846  ....  110,000    "       " 

"  1849  ....  115,000    "       " 

"  1854  ....  308,000  net      " 

"  1855  ....  343,000    "       " 

"  1856  ....  394,000    "       "      a 

As  the  anthracite  iron  production  increased,  that  of  char- 
coal iron  decreased.  Under  the  tariff  act  of  1842,  a 
large  number  of  new  charcoal  furnaces  had  been  put  up.3 
Many  of  these  had  to  be  given  up  under  the  combined 
competition  of  anthracite  and  of  English  iron.  Some 
maintained  themselves  by  using  coke  and  raw  bituminous 
coal,  in  those  parts  of  the  country  where  bituminous  coal 
was  to  be  had 4 ;  others  disappeared.  That  at  least  some 

1  See  a  "  Letter  of  the  Philadelphia  Coal  and  Iron  Trade  to  the  Commit- 
tee on  Finance  "  (pamphlet,  Philadelphia,  1844). 

2  The  figure  for  1846  is  that  given  in  Taylor,   ''Statistics  of  Coal,"  p. 
133.     Swank  gives  the  figure  for  1846  as  123,000  (gross  ?)  tons.     "  Iron  in 
All   Ages,"  p.  274.      The   figures   for   1849-56  are  from   Lesley,  "  Iron 
Manufacturers'  Guide  (1859),"  pp.  751,752.      Those  given  by  Grosvenor, 
"  Does  Protection  Protect?"  p.  225,  vary  somewhat ;  but  the  differences 
are  not  great. 

3  See  the  figures  in  Grosvenor,  p.  215.     There  were  built  in  1843  9  char- 
coal furnaces  ;   in  1844,  23  ;   in  1845,  35  ;  in  1846,  44  ;  in  1847,  34  ;  in 
1848,  28  ;  in  1849,  Z4- 

4  The  use  of  coke  began  in  the  United  States  about  1850,  but  was  of 
little  importance  until  after  1856.     The  use  of  raw  bituminous  coal  was  in- 
troduced about  1850  in  the  Shenango  and  Mahoning  valleys  (on  the  border 


THE    TARIFF,    1830-1860.  133 

of  them  should  disappear  was  inevitable.  Charcoal  iron 
for  general  use  was  a  thing  of  the  past ;  and  the  effect  of 
the  tariff  of  1842  was  to  call  into  existence  a  number  of 
furnaces  which  used  antiquated  metnods,  and  before  long 
must  have  been  displaced  in  any  event  by  anthracite 
furnaces 

The  use  of  anthracite  not  only  stimulated  the  produc- 
tion of  pig-iron,  but  also  that  of  rolled  iron  and  railroad 
bars.  Anthracite  was  first  used  in  puddling  and  reheating 
in  1 844  and  1845,*  and  thenceforward  rolled  iron  was  made 
regularly  in  large  quantities.  In  1856  the  production  of 
rolled  iron  was  nearly  500,000  tons.2  Iron  rails  first  began 
to  be  made  while  the  tariff  act  of  1842  was  in  force, 
though  the  steps  towards  making  them  were  taken  even 
before  that  act  put  an  end  to  the  free  admission  of  Eng- 
lish rails.3  With  the  decline  in  railroad  building  and  the 

between  Pennsylvania  and  Ohio),  where  there  is  suitable  coal.  Swank, 
*'  Iron  in  All  Ages,"  pp.  281—284.  In  the  "  Report  of  the  American  Iron 
and  Steel  Association  for  1876  "  (prepared  by  Swank),  the  following  figures 
are  given  of  the  production  of  iron  with  the  various  kinds  of  fuel.  I  have 
selected  a  few  typical  years  : 

Anthracite  Charcoal  Bituminous  coal 

Year.  iron.  iron.  and  coke  iron.  Total. 

J854         339>°°°  342,ooo  55,ooo  736,000 

1856          443,000  370,000  70,000  883,000 

1858          362,000  285,000  58,000  705,000 

i860     519,000     278,000     122,000     919,000 

The  figures  here  denote  net  tons. 

1  Speech  of  A.  S.  Hewitt,  in  "  Proceedings  of  Iron  Convention  at  Albany  " 
(1849),  p.  54. 

2  Lesley,   "  Iron  Manufacturers'  Guide,"  p.  761. 

3  See  a  pamphlet,   "Observations  on  the  Expediency  of  Repealing  the 
Act  by  which  Railroad  Iron  is  Released  from  Duty,"  1842.     It  gives  an  ac- 
count  of  large  rolling  mills  then  being  erected  at  Danville,  Pennsylvania. 


134  THE    TARIFF      1 830-1860. 

general  fall  in  iron  prices,  which  took  place  in  1849, 
of  the  rail  mills  stopped  work.  But  the  business  revived 
with  the  general  prosperity  which  set  in  early  in  the  dec- 
ade, and  the  production  of  rails  steadily  increased  until 
1856.  Under  the  influence  of  the  crisis  of  1857  it  fell, 
but  soon  rose  again,  and  in  1860  was  more  than  200,000 
tons.1 

To  sum  up  :  The  high  duty  on  iron  in  its  various  forms 
between  1832  and  1841,  and  again  in  1842-46,  impeded 
importation,  retarded  for  the  United  States  that  cheapen- 
ing of  iron  which  has  been  one  of  the  most  important 
factors  in  the  march  of  improvement  in  this  century,  and 
maintained  in  existence  costly  charcoal  furnaces  long 
after  that  method  had  ceased  in  Great  Britain  to  be  in 
general  use.  The  first  step  towards  a  vigorous  and 
healthy  growth  of  the  iron  industry  was  in  the  use  of  an- 
thracite in  1840.  That  step,  so  far  from  being  promoted 
by  the  high  duties,  was  taken  in  a  time  when  duties  were 
on  the  point  of  being  reduced  to  the  20  per  cent,  level. 
Hardly  had  it  been  taken  when  the  high  duties  of  the 
tariff  act  of  1842  brought  about  (not  indeed  alone,  but  in 
conjunction  with  other  causes)  a  temporary  return  to  the 


1  See   the    figures  given  in  "  Report  of  Iron  and  Steel  Association  foi 
1876,"  p.  165.     The  production  of  rails  is  there  stated  to  have  been  : 

In  1849 24,000  tons. 

"  1850 44,000     " 

'*  1854 108,000 

"  1856  f.  180,000     " 

"  1857         ......         162,000     " 

-'•  1860        .        .        .        ,        .        .        205,000     " 


THE    TARIFF,    1830-1860.  135 

old  charcoal  process.  A  number  of  new  charcoal  furnaces 
were  built,  unsuited  to  the  industry  of  the  time  and  cer- 
tain to  succumb  before  long.  Under  the  lower  duties 
from  1846  to  1860,  the  charcoal  production  gradually  be- 
came a  less  and  less  important  part  of  the  iron  industry, 
and  before  the  end  of  the  period  had  been  restricted  to 
those  limits  within  which  it  could  find  a  permanent 
market  for  the  special  qualities  of  its  iron.1  On  the  other 
hand,  the  lower  duties  did  not  prevent  a  steady  growth  in 
the  making  of  anthracite  iron ;  while  the  production  of 
railroad  iron  and  of  rolled  iron  in  general,  also  made  pos- 
sible by  the  use  of  anthracite,  showed  a  similar  steady 
progress.  There  is  no  reason  to  doubt  that,  had  there 
been  no  duty  at  all,  there  would  yet  have  been  a  large 
production  of  anthracite  pig-  and  rolled  iron.  Meanwhile 
the  country  was  rapidly  developing,  and  needed  much 
iron.  The  low  duties  permitted  a  large  importation  of 
foreign  iron,  in  addition  to  a  large  domestic  production. 
The  comparative  cheapness  and  abundance  of  so  import- 
ant an  industrial  agent  could  not  have  operated  other- 
wise than  to  promote  material  prosperity. 

We  turn  now  to  another  industry, — the  manufacture  of 
cotton  goods,  by  far  the  largest  and  most  important 
branch  of  the  textile  industry.  Here  we  are  met  at  the 

1  Charcoal  iron  has  qualities  which  cause  a  certain  quantity  of  it  to  be  in 
demand  under  any  circumstances.  Since  it  settled  down,  about  1860,  to  its 
normal  place  as  a  supplement  to  coal-made  iron,  the  product  has  steadily 
increased  with  the  growing  needs  of  the  country.  In  the  years  1863-65  the 
annual  product  was  about  240,000  tons.  In  1886  it  was  460,000  tons. 


136  THE    TARIFF,    1830-1860. 

outset  by  the  fact  that,  at  the  beginning  of  the  period 
which  we  are  considering,  the  cotton  manufacture  was  in 
the  main  independent  of  protection,  and  not  likely  to  be 
much  affected,  favorably  or  unfavorably,  by  changes  in 
duties.  Probably  as  early  as  1824,  and  almost  certainly 
by  1832,  the  industry  had  reached  a  firm  position,  in  which 
it  was  able  to  meet  foreign  competition  on  equal  terms.1 
Mr.  Nathan  Appleton,  who  was  a  large  owner  of  cotton 
factory  stocks,  and  who  was  also,  in  his  time,  one  of  the 
ablest  and  most  prominent  advocates  of  protective  duties, 
said  in  1833  that  at  that  date  coarse  cottons  could  not 
have  been  imported  from  England  if  there  had  been  no 
duty  at  all,  and  that  even  on  many  grades  of  finer  goods 
competition  was  little  to  be  feared.  In  regard  to  prints, 
the  American  goods  were,  quality  for  quality,  as  cheap  as 
the  English,  but  might  be  supplanted,  in  the  absence  of 
duties,  by  the  poorer  and  nominally  cheaper  English 
goods, — an  argument,  often  heard  in  our  own  day,  which 
obviously  puts  the  protective  system  on  the  ground  of 
regulating  the  quality  of  goods  for  consumers.  The  gen- 
eral situation  of  the  cotton  manufacture,  as  described  by 
Appleton,  was  one  in  which  duties  had  ceased  to  be  a 
factor  of  much  importance  in  its  development.2 

1  See  the  previous  essay  on  "  Protection  to  Young  Industries,"  Part  III., 
where  an  account  is  given  of  the  history  of  the  cotton  manufacture  up  to 
1824. 

2  See  Appleten's  speech  on  the  Verplanck  bill  of  1833,  "  Congressional 
Debates,"  IX.,  pp.   1216-1217.     Compare  his  remarks  in  the  same  vol- 
ume at  p.   1579. 


THE    TARIFF,    1830-1860.  137 

During  the  extraordinary  fluctuations  of  industry  and 
the  gradual  reduction  of  duties  which  ensued  under  the 
compromise  tariff  of  1833,  the  business  of  manufacturing 
cottons  was  profitable  and  expanded,  or  encountered  de- 
pression and  loss,  in  sympathy  with  the  industry  of  the 
country  at  large,  being  influenced  chiefly  by  the  expansion 
of  credit  and  the  rise  of  prices  before  1837  and  1839,  anc^ 
the  crisis  and  liquidation  that  followed  those  years.  Not- 
withstanding the  impending  reductions  of  duty  under  the 
Compromise  Act,  large  investments  were  made  in  the 
business  in  the  earlier  part  of  the  period.  Thus,  in  1835- 
36,  the  Amoskeag  Company  began  on  a  large  scale  its 
operations  in  Manchester,  N.  H.1  The  depression  at  the 
close  of  the  decade  checked  growth  for  a  while,  but  did 
not  prevent  new  investments  from  being  made,  even 
before  the  passage  of  the  act  of  1842  settled  the  tariff 
uncertainty.2  The  best  informed  judges  said  that  the 
causes  of  increase  or  decrease  of  profit  had  been,  as  one 
might  expect,  the  same  as  those  that  produced  fluctua- 
tions in  other  branches  of  business  ;  and  they  made  no 
mention  of  duties  or  of  tariff."  Appleton's  account  of  the 

1  Potter,  "  History   of   Manchester,"  p.    552.      The    Stark    Mills   were 
built  in  1838,  the  second  Stark  Mills  in  1839. 

2  Earl,  "  History  of  Fall  River,"  pp.  35-37.      "  From  the  panic  of  1837, 
which  affected  every  business  centre  in  the  country,  Fall  River  seems  to 
have  speedily  recovered,  since  within  a  few  years  from  that  date  nearly 
every  mill  in  the  place  was  enlarged,  though  only  one  new  one  was  built." 
Ibid.,  p.  53. 

3  See  the  answers  from  T.  G.  Gary,  treasurer  of  a  Lowell  mill,  and  from 
Samuel  Batchelder  to  circulars  sent  out  in  1845  by  Secretary  Walker.   Batch- 


138  THE    TAX  IFF,    1830-1860. 

stage  reached  by  the  industry  finds  confirmation  in  a  care- 
ful volume  on  the  cotton  manufacture  in  the  United 
States,  published  in  1840  by  Robert  Montgomery.  This 
writer's  general  conclusions  are  much  the  same  as  those 
which  competent  observers  reach  for  our  own  time. 
Money  wages  were  about  twice  as  high  in  the  United 
States,  but  the  product  per  spindle  and  per  loom  was 
considerably  greater.  The  cotton,  in  his  time,  was  not  so 
well  mixed,  not  so  thoroughly  cleaned,  not  so  well  carded 
in  the  United  States  as  in  England  ;  but,  on  the  other 
hand,  the  Americans  were  superior  in  ordinary  power-loom 
weaving,  as  well  as  in  warping  and  dressing.  Elaborate 
tables  are  given  of  the  expenses  per  unit  of  product  in 
both  countries,  the  final  result  of  which,  when  all  things 
were  considered,  showed  a  difference  of  three  per  cent,  in 
favor  of  the  American  manufactures.  Calculations  of 
this  kind,  which  are  common  enough  in  discussions  of 
protective  duties,  are  apt  to  express  inadequately  the 
multiplicity  of  circumstances  which  affect  concrete  indus- 
try ;  yet  they  may  gauge  with  fair  accuracy  the  general 
conditions,  and  in  this  case  were  made  intelligently  and 
without  bias.  It  is  worth  noting  that  Montgomery  attrib- 
utes the  success  of  the  Americans  in  exporting  cottons  to 


elder,  our  most  trustworthy  informant  on  the  early  history  of  the  cotton 
manufacture,  writes  that  "  the  increase  and  decrease  of  profit  from  1831  to 
1844  have  conformed  very  nearly  to  the  general  prosperity  of  the  country." 
The  circulars  and  answers  are  printed  in  the  appendices  to  Walker's  Re- 
port. Exec.  Doc.  1845-46,  vol.  II.,  No.  6,  pp.  215,  216,  313. 


THE    TARIFF,    1830-1860.  139 

greater  honesty  in   manufacturing  and   to  the  superior 
quality  of  their  goods.1 

During  the  years  following  th>e  passage  of  the  act 
of  1842,  by  which  the  duties  on  cottons  were  increased 
Jargely,  the  manufacturers  made  high  profits.  In  Secre 
tary  Walker's  Report,  and  in  other  attacks  on  protective 
duties,  much  was  made  of  this  circumstance,  the  high 
profits  being  ascribed  to  the  new  duties.  The  protec- 
tionists denied  the  connection,  and  a  lively  controversy 
ensued.8  The  truth  seems  to  be  that  the  case  was  not 
different  from  that  usually  presented  in  economic  phe- 
nomena,— several  causes  combined  to  produce  a  single 
general  effect.  The  high  duties  very  likely  served,  in 
part,  to  enable  a  general  advance  of  profits  to  be  main- 
tained for  several  years.  But  there  was  also  an  increased 

1  See  "  Montgomery's  "  Cotton  Manufacture,"  pp.  29,  38,  82,  86,  91, 
101.  The  tables  of  expenses  are  on  pp.  124,  125  ;  the  remarks  on  quality 
of  goods,  on  pp.  130,  194  ;  on  wages  and  product,  on  pp.  118-121,  123. 
Montgomery  was  superintendent  of  the  York  Factories  at  Saco,  Maine,  of 
which  Samuel  Batchelder  was  treasurer.  Allusions  to  Montgomery's  book, 
and  confirmation  of  some  of  his  conclusions,  may  be  found  in  Batchelder's 
"  Early  Progress  of  the  Cotton  Manufacture,"  p.  80  and  following. 

At  a  convention  in  favor  of  protection,  held  in  New  York  in  1842,  com- 
mittees were  appointed  on  various  industries.  The  committee  on  cottons 
reported  a  recommendation  to  Congress  of  minimum  duties  on  plain  and 
printed  goods,  but  added  that  these  duties  were  "  more  than  is  necessary 
for  much  the  largest  part  of  the  cotton  goods,"  and  that  "  most  of  the 
printed  calicoes  are  now  offered  to  the  consumer  at  lower  prices  than  they 
could  be  imported  under  a  tariff  for  revenue  only." 

9  See  T.  G.  Gary,  "  Results  of  Manufactures  at  Lowell,"  Boston,  1845  ; 
N.  Appleton,  "  Review  of  Secretary  Walker's  Report,"  1846;  and  the 
speeches  of  Rockwell,  "  Congr.  Globe,"  1845-46,  pp.  1034-1037,  and  Win- 
throp,  ibid.,  Appendix,  p.  969. 


I4O  THE    TARIFF,    1830-1860. 

export  to  China,  which  proved  highly  profitable.  More- 
over, the  price  of  raw  cotton  was  low  in  these  years,  lag- 
ging behind  the  advance  in  the  prices  of  cotton  goods ; 
and,  as  long  as  this  lasted,  the  manufacturers  made  large 
gains.  The  fact  that  prosperity  was  shared  by  the  cotton 
manufacturers  in  England  shows  that  other  causes  than  the 
new  tariff  must  have  been  at  work. 

On  the  other  hand,  when  the  act  of  1846  was  passed, 
the  protectionists  predicted  disaster '  ;  but  disaster  came 
not,  either  for  the  country  at  large  or  for  the  cotton  in- 
dustry. Throughout  the  period  from  1846  to  1860  the 
manufacture  of  cotton  grew  steadily,  affected  by  the  gen- 
eral conditions  of  trade,  but  little  influenced  by  the  lower 
duties.  Exact  figures  indicating  its  fortunes  are  not  to  be 
had,  yet  we  have  enough  information  to  enable  us  to  judge 
of  the  general  trend  of  events.  The  number  of  spindles 
in  use  gives  the  best  indication  of  the  growth  of  cotton 
manufacturing.  We  have  no  trustworthy  figures  as  to 
the  number  of  spindles  in  the  whole  country  ;  but  we 
have  figures,  collected  by  a  competent  and  well-informed 
writer,  in  regard  to  Massachusetts.  That  State  has  always 
been  the  chief  seat  of  the  cotton  manufacture,  and  its 
progress  there  doubtless  indicates  what  took  place  in  the 
country  at  large.  The  number  of  spindles  in  Massachu- 

1  Abbott  Lawrence  predicted  in  1849  that  "  all  this  [a  general  crash]  will 
take  place  in  the  space  of  eighteen  months  from  the  time  this  experimental 
bill  goes  into  operation  ;  not  a  specie-paying  bank  doing  business  will 
be  found  in  the  United  States."  "Letters  to  Rives,"  p.  12.  Appleton 
made  a  similar  prediction  in  his  "  Review  of  Walker's  Report,"  p.  28. 


THE    TARIFF,  1830-1860.  141 

setts,  which  was,  in  round  numbers,  340,000  in  1831,  had 
nearly  doubled  in  1840,  was  over  800,000  in  1845,  anc* 
was  over  1,600,000  in  1860,  having,  again  nearly  doubled 
during  the  period  of  low  duties.1  The  same  signs  of 
growth  and  prosperity  are  seen  in  the  figures  of  the 
consumption  of  raw  cotton  in  the  United  States,  which, 
compiled  independently,  reach  the  same  general  result. 
Between  the  first  half  of  the  decade  i84O«-5O,  and  the 
second  half  of  the  decade  1850-60,  the  quantity  of  raw 
cotton  used  in  the  mills  of  the  United  States  about 
doubled.  The  annual  consumption,  which  had  been 
about  150,000  bales  in  1830,  rose  to  an  average  of  more 
than  300,000  bales  in  the  early  years  of  the  next  decade, 
and  again  to  one  of  more  than  600,000  bales  in  the  years 
1850-54.  In  the  five  years  immediately  preceding  the 
civil  war,  the  average  annual  consumption  was  about 

1  The  following  figures  are  given  by  Samuel  Batchelder  in  a  "  Report  to 
the  Boston  Board  of  Trade,"  made  in  1860  (published  separately  ;  the  essen- 
tial parts  printed  also  in  "  Hunt's  Merchants'  Magazine,"  xlv.,  p.  14) : 

Spindles  in  Massachusetts : 
In  1831  340,000 


1840 

1845 
1850 
1855 
1860 


624,500  (other  sources  make  it  665,000). 

817,500 
1,288,000 
1,519,500 
1,688,500 


For  Ne*v  England,  and  the  United  States  as  a  whole,  Batchelder  gives  the 
following  figures,  taken  from  De  Bow,  for  the  years  1840  and  1850.  They 
are  not  entirely  trustworthy,  but  may  be  accepted  as  roughly  accurate.  We 

add  the  census  figures  for  1860  : 

Spindles  in 

New  England.  United  States. 

1840        .        .         1,597,000        .        .  2,112,000 

1850       .        .        2,751,000       .        .  3,634,000 

1860        .        .        3,859,000        .         .  5,236,000 


142  THE    TARIFF,  1830-1860. 

800,000  bales.  During  these  years  the  consumption  of 
cotton  in  Great  Britain  seems  to  have  increased  at  very 
nearly  the  same  rate.1  Such  figures  indicate  that  the 
cotton  manufacture  was  advancing  rapidly  and  steadily. 
Another  sign  of  its  firm  position  is  the  steady  increase 
during  the  same  period  in  the  exports  of  cotton  goods, 
chiefly  to  China  and  the  East.  The  value  of  the  cotton 
goods  exported  averaged  but  little  over  $3,000,000  annu- 
ally between  1838  and  1843,  rose  to  over  $4,000,000 
between  1844  and  1849,  was  nearly  $7,000,000  a  year 
between  1851  and  1856,  was  over  $8,000,000  in  1859,  ancl 
almost  touched  $11,000,000  in  1860.  An  industry  which 
regularly  exports  a  large  part  of  its  products  can  hardly 
be  stimulated  to  any  considerable  extent  by  protective 
duties.  No  doubt,  the  absence  of  high  duties  had  an 
effect  on  the  range  of  the  industry.  It  was  confined 
mainly  to  the  production  of  plain,  cheap,  staple  cotton 
cloths,  and  was  not  extended  to  the  making  of  finer  and 
"  fancy "  goods.  But,  even  under  the  high  protective 
duties  of  the  last  fifty  years,  the  bulk  of  the  pro- 
duct has  continued  to  be  of  the  first  mentioned  kind, 
and  cottons  of  that  grade  have  been  sold,  quality  for 
quality,  at  prices  not  above  those  of  foreign  goods ;  while 
comparatively  little  progress  has  been  made  in  the  manu- 
facture of  the  finer  grades.2 

1  The  reader  is  referred  to  the  Appendix  to  the  Quarterly  Journal  of 
Economics  for  April,  1888,  for  tables  of  the  consumption  of  cotton  and  of 
the  exports  of  cotton  goods. 

2  Ba'chelder,  who  was  a  decided  advocate  of  preelection,  wrote  in  1861  a 


THE    TARIFF,  1830-1860.  143 

The  situation  of  the  woollen  manufacture  differs  in 
some  important  respects  from  that  of  the  cotton  manu- 
facture, most  noticeably  in  that  it  is  less  favorable  as 
regards  the  supply  of  raw  material.  The  maker  of  cot- 
ton goods  is  sure  of  securing  at  home  cotton  of  the  best 
quality  at  a  price  below  that  which  his  foreign  rival  must 
pay.  But  many  qualities  of  wool  cannot  be  produced  to 
advantage  in  the  United  States ;  while  others  cannot  be 
grown  at  all,  or  at  least,  notwithstanding  very  heavy 
protective  duties,  never  have  been  grown.  Moreover, 
the  raw  material,  when  obtained,  is  neither  so  uniform 
in  quality  nor  so  well  adapted  to  treatment  by  machin- 
ery  as  is  the  fibre  of  cotton.  Wool  is  of  the  most 
diverse  quality,  varying  from  a  fine  silk-like  fibre  to  a 

series  of  articles  for  the  Boston  Commercial  Advertiser,  in  which,  after  com- 
paring the  prices  and  qualities  of  English  and  American  shirtings,  he  said  : 
"  The  inquiry  may  then  be  made,  What  occasion  is  there  for  a  protective 
duty  ?  The  answer  is  :  There  would  be  none  in  the  ordinary  course  of  busi- 
ness. But  there  are  sometimes  occasions  when  *  *  *  there  has  been  a 
great  accumulation  of  goods  in  the  hands  of  manufacturers  abroad,  so  that, 
if  crowded  on  their  market,  it  would  depress  the  price  of  the  usual  supply 
of  their  customers  at  home.  On  such  occasions,  our  warehouse  system  af- 
fords the  opportunity,  at  little  expense,  to  send  the  goods  here,  where  they 
may  be  ready  to  be  thrown  on  the  market  to  be  sold,"  etc. 

In  Ellison's  "  Handbook  of  the  Cotton  Trade,"  it  is  stated,  at  p.  29; 
' '  It  is  believed  that,  had  it  not  been  for  the  free-trade  policy  of  Great  Brit- 
ain, the  manufacturing  system  of  America  would  at  the  present  time  have 
been  much  more  extensive  than  it  is  ;  but  the  spinners  and  manufacturers 
of  Lancashire  can  as  yet  successfully  compete  with  those  of  Lowell,  though 
for  how  long  a  time  remains  to  be  seen,  for  the  latter  are  yearly  gaining  ex- 
perience and  improving  their  machinery,  so  that  before  long  they  will  be 
able  to  compete  with  the  old  country,  more  especially  should  the  executive 
[ftc]  abolish  the  present  protective  system  adopted  with  respect  to  the  im- 
port of  cotton  manufactures."  This  was  written  in  1858. 


144  THE    TARIFF,  1 830-'!  860. 

coarse  hairy  one.  A  process  of  careful  sorting  by  hand 
must  therefore  be  gone  through  before  manufacture  can 
begin.  In  some  branches  of  the  industry  the  qualities  of 
the  fibre,  and  those  of  the  goods  which  are  to  be  made 
from  it,  call  for  more  of  manual  labor,  and  admit  in  less 
degree  of  the  use  of  machinery,  than  is  the  case  with  the 
cottons ;  and  it  is  a  familiar  fact,  though  one  of  which  the 
true  meaning  has  not  often  been  grasped,  that  a  need  of 
resorting  to  direct  manual  labor  in  large  proportion  and  a 
difficulty  in  substituting  machinery,  constitute,  under  con- 
ditions of  freedom,  an  obstacle  to  the  profitable  prosecu- 
tion of  a  branch  of  industry  in  the  United  States.  But, 
on  the  other  hand,  certain  qualities  of  wool  are  grown  to 
advantage  in  the  climate  of  this  country  and  under  its 
industrial  conditions,  especially  strong  merino  wools  of 
good  though  not  fine  grade,  of  comparatively  short 
staple,  adapted  for  the  making  of  flannels,  blankets,  and 
substantial  cloths.  At  the  same  time,  machinery  can  be 
applied  to  making  these  fabrics  with  less  difficulty  than 
to  the  manufacture  of  some  finer  goods. 

Our  information  in  regard  to  the  history  of  the  woollen 
manufacture  is  even  more  defective  than  that  on  iron  and 
cottons.  For  the  period  between  1830  and  1840  we  have 
no  information  that  is  worth  any  thing.  In  1840  the  in- 
dustry was  confined  to  making  satinets  (a  substantial, 
inexpensive  cloth,  not  of  fine  quality),  broadcloths,  flan- 
nels, and  blankets.1  The  tariff  act  of  1842  imposed  on 

1  See  a  passage  quoted  from  Wade's  "  Fibre  and  Fabric  "  in  the  Bureau  of 
Statistics'  "  Report  on  Wool  and  Manufactures  of  Wool,"  1887,  p.  xlvii. 


THE    TARIFF,  1830-1860.  145 

woollen  goods  a  duty  of  40  per  cent.,  and  on  wool  one  of 
three  cents  a  pound  plus  30  per  cent,  on  the  value.  It  is 
said  that  during  the  four  years  in  which  these  rates  were 
in  force  a  stimulus  was  giving  to  the  making  of  finer 
qualities  of  broadcloths,  the  development  being  aided 
by  evasions  of  the  ad  valorem  duty  on  wool.1  The  act, 
however,  did  not  remain  in  force  long  enough  to  make  it 
clear  what  would  have  been  its  permanent  effect  on  the 
woollen  manufacture.  Whatever  may  have  been  the 
start  made  in  these  few  years  in  making  finer  woollens, 
this  branch  of  the  industry,  as  is  generally  admitted,  well- 
nigh  disappeared  under  the  duties  of  1846.  The  tariff 
of  that  year  imposed  a  duty  of  30  per  cent,  on  woollen 
goods  in  general ;  but  flannels  and  worsteds  were  admitted 
at  25  per  cent.,  and  blankets  at  20  per  cent.  On  wool 
also  the  duty  was  30  per  cent.  Under  this  arrangement 
of  duties, — whether  or  not  in  consequence  of  it, — no 
development  took  place  in  those  branches  of  the  manu- 
facture which  needed  wool  that  was  subject  to  the  30  per 
cent.  duty.  The  finest  grades  of  woollens  were  not  made 
at  all.  But  the  manufacture  of  cloths  of  ordinary  quality 
(so-called  cassimeres  and  similar  goods),  and  that  of 
blankets  and  flannels,  continued  to  show  a  regular  growth. 
The  census  figures  are  not  of  much  value  as  accurate 
statistics,  but  there  seems  to  be  no  reason  for  doubting 
that  they  prove  a  steady  advance  in  the  woollen  manufac- 

^rosvenor.     "Does  Protection  Protect  ?"  p.  147;   Introduction  to  the 
volume  of  the  "  Census  of  1860  "  on  Manufactures,  p.  xxxiii. 


146  THE    TARIFF,   1830-1860. 

ture  as  a  whole.1  The  growth  was  confined  mostly  to 
those  branches  which  used  domestic  wool ;  but  within 
these  there  was  not  only  increase,  but  development.  The 
methods  of  manufacture  were  improved,  better  machinery 
was  introduced,  and  new  kinds  of  goods  were  made.2  It 
is  a  striking  fact  that  the  very  high  protective  duties  which 
were  imposed  during  the  civil  war,  and  were  increased 
after  its  close,  have  not  brought  the  manufacture  of 
woollen  cloths  to  a  position  substantially  different  from 
that  which  had  been  attained  before  1860.  The  descrip- 
tion of  the  industry  which  the  spokesman  of  the  Asso- 


1  The  census  figures  on 

the  woollen  manufacture  are  : 

1840  .  .  . 
1850  .  .  . 
1860  .  .  . 

Capital.          Value  of  Product. 
(In  million  dollars.) 
.      15-7                          20. 
.      26.1                          43.5 
.      30.8                          61.9 

Hands 
Employed. 
21,342 
34,895 
41,300 

The  figures  for  1850  are  exclusive  of  those  relating  to  blankets  ;  for  1860 
are  exclusive  of  those  relating  to  worsteds. 

2  ' '  Eighteen  hundred  and  fifty  saw  the  success  of  the  Crompton  loom  at 
Lowell  and  Lawrence,  on  which  were  made  a  full  line  of  Scotch  plaids  in  all 
their  beautiful  colorings,  as  well  as  star  twills,  half-diamonds.  *  *  *  Up  to 
that  time  fancy  cassimeres  had  been  made  largely  through  the  Blackstone 
Valley  (in  Rhode  Island)  on  the  Crompton  and  Tappet  looms,  as  made  by 
William  Crompton.  As  early  as  1846  the  Jacquard  was  used  at  Woon- 
socket  and  Blackstone.  From  1850  to  1860  fancy  cassimeres  made  a  rapid 
advance,  and  the  styles  ran  to  extremes  far  more  than  they  have  ever  since." 
Wade's  "  Fibre  and  Fabric,"  as  quoted  above,  p.  xlviii. 

According  to  the  official  "Statistical  Information  Relating  to  Certain 
Branches  of  Industry  in  Massachusetts,"  1855,  at  pp.  573-575,  woollen  goods 
were  made  in  1855  in  that  State  as  follows  : 

Broadcloth  to  the  value  of $     838,000 

Cassimeres  to  the  value  of 5,015,000 

Satinets  to  the  value  of 2,709,000 

Flannels  and  blankets  to  the  value  of  ...     3,126,000 
Woollen  yarns  to  the  value  of    ....     '.        386,000 


THE    TARIFF,  1830-1860.  147 

ciation  of  Wool  Manufacturers  gave  in  1884  is,  in  the 
main,  applicable  to  its  state  in  1860.  "  The  woollen  manu- 
facture of  this  country  *  *  *  is  alrpost  wholly  absorbed  in 
production  for  the  masses.  Nine  tenths  of  our  card-wool 
fabrics  are  made  directly  for  the  ready-made  clothing 
establishments,  by  means  of  which  most  of  the  laboring 
people  and  all  the  boys  are  supplied  with  woollen  gar- 
ments. The  manufacture  of  flannels,  blankets,  and  ordi- 
nary knit  goods — pure  necessaries  of  life — occupies  most 
of  the  other  mills  engaged  in  working  up  carded  wool." ' 

Some  outlying  branches  of  the  woollen  manufacture, 
however,  showed  a  striking  advance  during  the  period  we 
are  considering.  The  most  noteworthy  of  these  is  the 
carpet  manufacture,  which  received  a  great  impetus  from 
the  application  of  newly-invented  machinery.  The  power- 
loom  for  weaving  ingrain  carpets  was  invented  in  1841 
by  Mr.  E.  B.  Bigelow,  and  the  more  complicated  loom 
for  weaving  Brussels  carpets  was  first  perfected  by  the 
same  inventive  genius  in  i848.2  The  new  machinery  at 

1  Mr.  John  L.  Hayes,  in  the  "  Bulletin  of  the  Association  of  Wool  Manu- 
facturers/'vol.  xiv.,  p.  116.  Mr.  Hayes  also  states  the  woollen  manufacture 
to  be  "  capable  of  producing  commodities  of  the  highest  luxury, — rich  car- 
pets, fine  upholsteries,  and  superfine  broadcloths  "  ;  but  his  description  of 
other  branches  of  the  industry  is  similar  to  that  quoted  in  the  text  on  card- 
wool  goods.  ' '  The  dress  goods  manufactured  are  fabricates  almost  exclu- 
sively for  the  million,  the  women  of  the  exclusive  and  fashionable  classes 
supplying  themselves  mainly  through  French  importations.  The  vast  car- 
pet manufacture  of  Philadelphia,  larger  than  in  any  city  of  Europe,  has  its 
chief  occupation  in  furnishing  carpets  for  the  more  modest  houses." 

'See  the  sketch  of  Mr.  Bigelow's  career  up  to  1854,  in  "  Hunt's  Mer- 
chants Magazine,"  xxx.,  pp.  162-170. 


148  THE    TARIFF,  1830-1860. 

once  put  the  manufacture  of  carpets  on  a  firm  basis  ;  and 
in  its  most  important  branches,  the  manufacture  of  ingrain 
and  Brussels  carpets,  it  became  independent  of  aid  from 
protective  duties.  A  similar  development  took  place  in 
the  manufacture  of  woollen  hose.  The  knitting-frame 
had  been  invented  in  England  as  early  as  the  sixteenth 
century,  but  had  been  worked  only  by  hand.  It  was  first 
adapted  to  machinery  in  the  United  States  in  1831,  and 
was  first  worked  by  machinery  at  Cohoes  in  New  York  in 
1832.  Other  inventions  followed;  and  a  prosperous  in- 
dustry developed,  which  supplied  the  entire  domestic 
market,  and  was  independent  of  protective  duties.1  On 
the  other  hand,  hardly  more  than  a  beginning  was  made 
before  the  civil  war  in  the  manufacture  of  worsted 
goods.  In  1860  there  were  no  more  than  three  consider- 
able factories  engaged  in  making  worsteds,  and  the  im- 
ports largely  exceeded  the  domestic  product.2  Some  ex- 

1See  the  account  of  the  history  of  the  manufacture  of  knit  goods  in  the 
"  Census  of  1860,"  volume  on  Manufactures,  pp.  xxxix.-xlv.  Compare  the 
brief  sketch  by  John  L.  Hayes  in  his  address  on  "  Protection  a  Boon  to  Con- 
sumers "  (Boston,  1867),  pp.  9-11.  No  attempt  had  been  made  before 
1860,  in  the  United  States  or  elsewhere,  to  make  knit  goods  of  cotton. 

2  See  the  Introduction  to  the  volume  on  Manufactures,  "Census  of 
1860,"  pp.  xxxvi.-xxxix. 

From  the  figures  of  production  in  the  "Census  of  1860,"  and  from  those 
of  imports  in  the  "  Report  on  Commerce  and  Navigation  "  for  the  fiscal  year 
1859-60,  we  have  the  materials  for  a  comparison  of  the  domestic  and  the 
foreign  supply  of  the  most  important  kinds  of  woollen  goods.  The  figures 

are  : 

Production,  Imports, 

1860.  1859-60. 
Woollens  generally  (including  flannels,  but  not 

blankets,  shawls,  or  yarns)         .         .         .        $43,500,000  $13,350,000 

Carpets 7,860,000  2,200,000 

Worsteds 3,700,000  12,300,000 


THE    TARIFF,  1830-1860.  149 

planation  of  this  state  of  things  may  be  found  in  the  com- 
paratively low  duty  of  25  per  cent,  on  worsteds  under  the 
tariff  of  1846.  Something  was  duetto  the  fact  that  the 
worsted  industry  in  England  not  only  was  long  estab- 
lished, but  was  steadily  improving  its  methods  and  ma- 
chinery. But  the  most  important  cause,  doubtless,  was 
the  duty  of  30  per  cent,  on  the  long-staple  combing  wool, 
which  then  was  needed  for  making  worsted  goods,  and 
which  physical  causes  have  prevented  from  being  grown 
to  any  large  extent  in  the  United  States. 

The  greatest  difference  between  the  woollen  industry 
as  it  stands  to-day  and  as  it  stood  before  1860  is  in  the 
large  worsted  manufacture  of  the  present,  which  has 
grown  up  almost  entirely  since  the  wool  and  woollens  act 
of  1867.  The  high  duties  undoubtedly  have  been  a  cause 
of  this  development,  or  at  least  were  so  in  the  beginning ; 
but  a  further  and  important  cause  has  been  the  great  im- 
provement in  combing  machinery,  which  has  rendered  it 
possible  to  make  so-called  worsted  goods  from  almost  any 
grade  of  wool,  and  has  largely  done  away  with  the  dis- 
tinction between  woollen  and  worsted  goods.  The  result 
has  been  that  the  worsted  makers,  as  well  as  the  makers 
of  woollens,  have  been  able  to  use  domestic  wool ;  and  it 
is  in  the  production  of  goods  made  of  such  wool  that  the 
greatest  growth  of  recent  years  has  taken  place. 

The  tariff  act  of  1857  reduced  the  duty  on  woollens  to 
24  per  cent.,  but  much  more  than  made  up  for  this  by 
admitting  wool  practically  free  of  duty.  Wool  costing 


150  THE    TARIFF,  1830-1860. 

less  than  twenty  cents  at  the  place  of  exportation  was  ad 
mitted  free,  which  amounted  in  effect  to  the  exemption 
of  almost  all  wool  from  duty.  Moreover,  dyestuffs  and 
other  materials  were  admitted  free  or  at  low  rates.  The 
free  admission  of  wool  from  Canada,  under  the  reciprocity 
treaty  of  1854,  had  already  been  in  force  for  three  years.1 
The  remission  of  duties  on  these  materials  explains  the 
willingness  with  which  the  manufacturers  in  general  ac^ 
ceded  to  the  rearrangement  of  rates  in  1857.  In  1860, 
when  the  beginnings  were  made  in  re-imposing  higher 
protective  duties,  it  was  admitted  that  no  demand  for 
such  a  change  came  from  manufacturers.2  The  only  ex- 
ception was  in  the  case  of  the  iron-makers  of  Pennsyl- 
vania, who  did  not  share  in  the  benefits  of  the  free  list, 

1  Large  quantities  of  combing  wool  were  imported  from  Canada  under 
the  reciprocity  treaty,  and  were  used  in  making  worsteds  and  carpets. 
In  1866,  when  the  treaty  was  terminated,  and  high  duties  had  been  im- 
posed on  wool  in  general,  the  manufacturers  pleaded  hard  for  the  con- 
tinued free  admission  of  Canada  wool,  though  they  were  active  in  securing 
the  general  high  duties  of  1867  on  wool  and  woollens.  But  they  did  not 
succeed  in  getting  the  Canada  wools  free.  See  the  ' '  Statement  of  Facts 
Relative  to  Canada  Wools  and  the  Manufacture  of  Worsteds,"  made  by  the 
National  Association  of  Wool  Manufacturers,  Boston,  1866. 

*  Senator  Hunter,  who  had  been  most  active  in  bringing  about  the  pas- 
sage of  the  act  of  1857,  said,  during  the  debate  on  the  Morrill  bill  of  1860. 
"  Have  any  of  the  manufacturers  come  here  to  complain  or  to  ask  for  new 
duties  ?  If  they  have,  I  am  not  aware  of  it,  with  the  exception,  perhaps,  of 
a  petition  or  two  presented  early  in  the  session  by  the  Senator  from  Con- 
necticut. Is  it  not  notorious  that  if  we  were  to  leave  it  to  the  manufacturers 
of  New  England  themselves,  to  the  manufacturers  of  hardware,  textile 
fabrics,  etc.,  there  would  be  a  large  majority  against  any  change?  Do 
we  not  know  that  the  woollen  manufacture  dates  its  revival  from  the  tariff 
of  1857,  which  altered  the  duties  on  wool?"  "  Congressional  Globe,"  1859 
-60,  p.  301.  Cp.  the  note  to  p.  160,  below. 


THE    TARIFF,   1830-1860.  15 1 

and  who  opposed  the  reduction  of  1857.  So  far  as  the 
manufacture  of  woollen  goods  was  concerned,  the 
changes  of  1857,  as  might  have  been  expected,  served 
to  stimulate  the  industry;  and  it  grew  and  prospered 
during  the  years  immediately  preceding  the  civil  war. 
A  remission  of  duty  on  materials  obviously  operates 
in  the  first  instance  mainly  to  the  advantage  of  producers 
and  middle-men,  and  brings  benefit  to  consumers  only 
by  a  more  or  less  gradual  process.  The  experiment  of 
free  wool,  with  a  moderate  duty  on  woollens,  was  not  tried 
long  enough  to  make  certain  what  would  be  its  final  re- 
sults. It  is  not  impossible  that,  as  is  often  asserted  by 
the  opponents  of  duties  on  wool,  the  free  admission  ot 
that  material  would  have  led  in  time  to  a  more  varied 
development  of  the  woollen  manufacture.  On  the  other 
hand,  it  may  be,  in  the  case  of  woollens  as  in  that  of  cot- 
tons, that  the  conditions  in  the  United  States  are  less 
favorable  for  making  the  finer  qualities  than  for  making 
those  cheaper  qualities  to  which  the  application  of  ma- 
chinery is  possible  in  greater  degree,  and  for  which,  at  the 
same  time,  the  domestic  wool  is  an  excellent  material. 
The  test  of  experience  under  conditions  of  freedom  could 
alone  decide  what  are  the  real  causes  of  the  comparatively 
limited  range  of  both  of  the  great  textile  industries;  but 
it  is  not  improbable  that  general  causes  like  those  just 
mentioned,  rather  than  the  hampering  of  the  supply  of 
wool,  account  for  the  condition  of  the  woollen  manufac- 
ture. However  that  may  be,  it  seems  certain  that  the 


152  ,  THE    TARIFF,   1830-1860. 

practical  remission  of  duty  in  1857,  whether  or  no  it  would 
in  the  long  run  have  caused  a  wide  development  of  the 
woollen  manufacture,  gave  it  for  the  time  being  a  distinct 
stimulus ;  it  seems  to  have  had  but  little,  if  any,  effect  on 
the  prices  of  domestic  wool  * ;  and  it  must  have  tended  at 
the  least  to  cheapen  for  the  consumer  goods  made  in 
whole  or  in  part  of  foreign  wool. 

It  would  be  possible  to  extend  this  inquiry  farther,3  but 
enough  has  been  said  for  the  present  purpose.  In  the 
main,  the  changes  in  duties  have  had  much  less  effect  on 
the  protected  industries  than  is  generally  supposed. 
Their  growth  has  been  steady  and  continuous,  and  seems 
to  have  been  little  stimulated  by  the  high  duties  of  1842, 
and  little  checked  by  the  more  moderate  duties  of  1846 
and  1857.  Probably  the  duties  of  the  last-mentioned 
years,  while  on  their  face  protective  duties,  did  not  have 
in  any  important  degree  the  effect  of  stimulating  indus- 

1  The  price  per  pound  of  medium  wool,  averaged  from  quarterly  quota- 
tions, was  : 

cts.  as. 

In  1852    .    .    38$      In  1856  45 

"  1853  53       "  1857  46 

"1854    •    •   42*      "1858  36 

"  1855  38       "  1859  47 

"  1860  47| 

The  prices  of  other  grades  moved  similarly.  The  panic  of  1857  caused  a 
fall  in  1858,  but  in  the  following  year  the  old  level  was  recovered.  The 
figures  are  based  on  the  tables  of  wool  prices  in  the  Bureau  of  Statistics' 
"  Report  on  Wool  and  Manufactures  of  Wool,"  1887,  p.  109.  The  move- 
ment of  wool  prices  abroad  during  these  years  seems  to  have  been  about 
the  same. 

2  In  the  Introduction  to  the  volume  on  Manufactures  of  the  "  Census  of 
1860,"  to  which  reference  has  been  made  before,  there  is  a  useful  sketch  of 
the  history  of  various  branches  of  manufacture  up  to  that  date. 


THE    TARIFF,  1830-1860.  153 

tries  that  could  not  have  maintained  themselves  under 
freedom  of  trade.  They  did  not  operate  as  strictly  pro- 
tective duties,  and  did  not  bring  tjjiat  extra  tax  on  con- 
sumers which  is  the  peculiar  effect  of  protective  duties. 
The  only  industry  which  presents  a  marked  exception  to 
these  general  conditions  is  the  manufacture  of  the  cruder 
forms  of  iron.  In  that  industry,  the  conditions  of  pro- 
duction in  the  eastern  part  of  the  United  States  were 
such  that  the  protective  duties  of  1842  caused  a  return 
to  old  processes,  and  an  enhanced  price  to  the  coun, 
try  without  a  corresponding  gain  to  producers.  Even 
under  the  rates  of  1846  and  after  the  use  of  anthracite 
coal,  the  same  effect  can  be  seen,  though  in  less  degree. 

We  often  hear  it  said  that  any  considerable  reduction 
from  the  scale  of  duties  in  the  present  tariff,  whose  char- 
acter and  history  will  be  considered  in  the  following  pages, 
would  bring  about  the  disappearance  of  manufacturing 
industries,  or  at  least  a  disastrous  check  to  their  develop- 
ment. But  the  experience  of  the  period  before  1860  shows 
that  predictions  of  this  sort  have  little  warrant.  At 
present,  as  before  1860,  the  great  textile  manufactures 
are  not  dependent  to  any  great  extent  on  protective 
duties  of  the  kind  now  imposed.  The  direction  of  their 
growth  has  been  somewhat  affected  by  these  duties,  yet 
in  a  less  degree  than  might  have  been  expected.  It  is 
striking  that  both  under  the  system  of  high  protection 
which  has  been  maintained  since  the  civil  war,  and  under 
the  more  moderate  system  that  preceded  it,  the  cotton 


154  TffE    TARIFF,    1830-1860. 

and  woollen  industries  have  been  kept  in  the  main  to 
those  goods  of  common  use  and  large  consumption  to 
which  the  conditions  of  the  United  States  might  be  ex- 
pected to  lead  them.  Very  heavy  duties  have  indeed 
stimulated  the  manufacture  of  more  expensive  goods ; 
and  the  gradual  change  in  the  general  economic  situation 
must  in  any  case  have  had  some  effect  in  making  the 
textile  industries  more  diversified.  The  iron  manufac- 
ture has  advanced  by  leaps  and  bounds,  chiefly  through 
the  development  of  great  natural  resources  in  the  heart 
of  the  country — hardly  touched  during  the  period  here 
under  discussion.  But  even  during  this  period  it  held  its 
own.  Manufactures  in  general  grew  and  flourished.  The 
extent  to  which  mechanical  branches  of  production  have 
been  brought  into  existence  by  the  protective  system  has 
been  greatly  exaggerated  by  its  advocates ;  and  even  the 
character  and  direction  of  their  development  have  been 
influenced  less  than,  on  grounds  of  general  reasoning, 
might  have  been  expected. 


PART  IV' 
TARIFF  LEGISLATION,  1861-1909. 

CHAPTER  I. 

THE  WAR  TARIFF. 

THE  Civil  War  revolutionized  the  financial  methods  of 
the  United  States.  A  new  monetary  system  was  created, 
and  tax  resources  before  undreamed  of  were  resorted  to, 
at  first  timorously,  in  the  end  with  a  rigor  that  hardly 
knew  bounds.  The  tariff,  which  had  long  been  the  sole 
source  of  federal  income,  was  supplemented  by  a  series 
of  extraordinary  internal  taxes,  and  was  itself  called  on 
to  yield  more  revenue  and  still  more.  The  high  duties 
which  the  war  thus  caused  to  be  imposed,  at  first  regarded 
as  temporary,  were  retained,  increased,  and  systematized, 
so  developing  gradually  into  a  system  of  extreme  protec- 
tion. For  many  years  the  tariff  was  spoken  of,  and  ac- 
curately, as  "  the  war  tariff," — a  name  which  faded  out 
of  use  as  the  community  became  accustomed  to  the  new 
regime,  and  forgot  the  various  half-hearted  and  unsuc- 
cessful endeavors  which  were  made  from  time  to  time 

toward  reduction  and  reform. 

155 


156  HISTORY  OF  THE  EXISTING  TARIFF, 

Before  the  war  we  had  a  tariff  of  duties  which,  though 
The  tariff  not  arranged  completely  or  consistently  on  the 
before  the  principles  of  free  trade,  was  yet  very  moderate 
in  comparison  with  the  existing  system.  For 
about  fifteen  years  before  the  Rebellion  began,  duties 
on  imports  were  fixed  by  the  acts  of  1846  and  1857. 
The  act  of  1846  had  been  passed  by  the  Democratic 
party  with  the  avowed  intention  of  putting  into  oper- 
ation, as  far  as  was  possible,  the  principles  of  free 
trade.  This  intention,  it  is  true,  was  by  no  means  car- 
ried out  consistently.  Purely  revenue  articles,  like  tea 
and  coffee,  were  admitted  free  of  duty ;  and  on  the  other 
hand,  articles  like  iron  and  manufactures  of  iron,  paper, 
glass,  wool,  and  woollen  goods, — in  fact  most  of  the  im- 
portant articles  with  which  the  protective  controversy  has 
been  concerned, — were  charged  with  a  duty  of  thirty  per 
cent.1  Other  articles  again,  like  steel,  copper,  lead,  were 
admitted  at  a  lower  duty  than  this,  not  for  any  reasons  of 
revenue,  but  because  they  were  not  then  produced  to  any 
extent  within  the  country,  and  because  protection  for 
them  in  consequence  was  not  asked.  Protection  was  by 
no  means  absent  from  the  act  of  1846;  and  the  rate  of 
thirty  per  cent,  which  it  imposed  on  the  leading  articles, 
gave  no  small  degree  of  protection.  Nevertheless,  the  tariff 
of  1846  was,  in  comparison  with  later  tariffs,  a  moderate 
measure;  and  a  return  to  its  rates  would  have  been 
considered  a  great  step  of  reform  by  those  who  were  op- 
1  Cf.  p.  114,  above. 


THE  WAR  TARIFF.  157 

posed  to  protective  duties.  The  act  of  1857  took  away 
still  more  from  the  restrictive  character  of  our  tariff  legis- 
lation. Congress,  it  mav  be  remarked,  acted  in  1857  with 
reasonable  soberness  and  impartiality,  and  without  being 
influenced  by  political  considerations^  The  maximum 
protective  duty  was  reduced  to  twenty-four  per  cent. ; 
many  raw  materials  were  admitted  free ;  and  the  level  of 
duties  on  the  whole  line  of  manufactured  articles  was 
brought  down  to  the  lowest  point  which  has  been  reached 
in  this  country  since  1815.  It  is  not  likely  we  shall  see, 
for  a  great  many  years  to  come,  a  nearer  approach  to  the 
free-trade  ideal. 

The  country  accepted  the  tariff  acts  of  1846  and  1857, 
and  was  satisfied  with  them.  Except  in  the  years  imme- 
diately following  the  passage  of  the  former  act,  when 
there  was  some  attempt  to  induce  a  return  to  a  more 
rigid  protective  system,  agitation  on  the  tariff  ceased 
almost  entirely.  There  is  no  doubt  that  the  period  from 
1846  to  1860  was  a  time  of  great  material  prosperity,  in- 
terrupted, but  not  checked,  by  the  crisis  of  1857.  LL 
would  be  going  too  far  to  assert  that  this  general  pros- 
perity was  due  chiefly  to  the  liberal  character  of  the  tariff. 
Other  causes  exercised  a  great  and  perhaps  a  predominant 
influence.  But  the  moderate  tariff  presumably  was  one 
of  the  elements  that  contributed  to  the  general  welfare. 
It  may  be  well  to  add  that  prosperity  was  not  confined  to 
any  part  of  the  country,  or  to  any  branches  of  industry. 
Manufactures  in  general  continued  to  flourish  ;  and  the 


158         t      HISTORY  OF  THE  EXISTING  TARIFF. 


reduction  of  duties  which  was  made  in  1857  had  the  con- 
sent  and  approbation  of  the  main  body  of  the  manufac- 
turing class. 

The  crisis  of  1857  had  caused  a  falling  off  in  the  reve- 
nue from  duties.  This  was  made  the  occasion  for  a  reac- 
tion from  the  liberal  policy  of  1846  and  1857.  ^n  1861 
the  Morrill  tariff  act  began  a  change  toward  a  higher  range 
of  duties  and  a  stronger  application  of  protection.  The 
Morrill  act  is  often  spoken  of  as  if  it  were  the  basis  of  the 
present  protective  system  But  this  is  by  no  means  the 
The  Morrill  case-  The  tariff  act  of  1861  was  passed  by  the 

tariff  act  House  of  Representatives  in  the  session  of 
1859-60,  the  session  preceding  the  election  of 
President  Lincoln.  It  was  passed,  undoubtedly,  with 
the  intention  of  attracting  to  the  Republican  party, 
at  the  approaching  Presidential  election,  votes  in  Penn- 
sylvania and  other  States  that  had  protectionist  lean- 
ings. In  the  Senate  the  tariff  bill  was  not  taken 
up  in  the  same  session  in  which  it  was  passed  in  the 
House.  Its  consideration  was  postponed,  and  it  was  not 
until  the  next  session  —  that  of  1  860-61  —  that  it  received 
the  assent  of  the  Senate  and  became  law.  It  is  clear  that 
the  Morrill  tariff  was  carried  in  the  House  before  any 
serious  expectation  of  war  was  entertained  ;  and  it  was 
accepted  by  the  Senate  in  the  session  of  1861  without 
material  change.  It  therefore  forms  no  part  of  the  finan- 
cial legislation  of  the  war,  which  gave  rise  in  time  to  a 
series  of  measures  that  entirely  superseded  the  Morrill 


THE  WAR  TARIFF.  159 

tariff.  Indeed,  Mr.  Morrill  and  the  other  supporters  of 
the  act  of  1861  declared  that  their  intention  was  simply 
to  restore  the  rates  of  1846.  The  important  change 
which  they  proposed  to  make  from  the  provisions  of  the 
tariff  of  1846  was  to  substitute  specific  for  ad-valorem 
duties.  Such  a  change  from  ad-valorem  to  specific 
duties  is  in  itself  by  no  means  objectionable ;  but  it  has 
usually  been  made  a  pretext  on  the  part  of  protectionists 
for  a  considerable  increase  in  the  actual  duties  paid. 
When  protectionists  make  a  change  of  this  kind,  they 
almost  invariably  make  the  specific  duties  higher  than  the 
ad-valorem  duties  for  which  they  are  supposed  to  be  an 
equivalent, — a  circumstance  which  has  given  rise  to  the 
common  notion,  of  course  unfounded,  that  there  is  some 
essential  connection  between  free  trade  and  ad-valorem 
duties  on  the  one  hand,  and  between  protection  and 
specific  duties  on  the  other  hand.  The  Morrill  tariff 
formed  no  exception  to  the  usual  course  of  things  in  this 
respect.  The  specific  duties  which  it  established  were  in 
many  cases  considerably  above  the  ad-valorem  duties  of 
1846.  The  most  important  direct  changes  made  by  the 
act  of  1861  were  in  the  increased  duties  on  iron  and  on 
wool,  by  which  it  was  hoped  to  attach  to  the  Republican 
party  Pennsylvania  and  some  of  the  Western  States. 
Most  of  the  manufacturing  States  at  this  time  still  stood 
aloof  from  the  movement  toward  higher  rates. 1 

1  Mr.  Rice,  of  Massachusetts,  said  in  1860  :   "  The  manufacturer  asks  no 
additional  protection.     He  has  learned,  among  other  things,  that  the  great- 


160  HISTORY  OF  THE  EXISTING  TARIFF. 

Hardly  had  the  Merrill  tariff  act  been  passed  when 
Fort  Sumter  was  fired  on.  The  Civil  War  began.  The 
need  of  additional  revenue  for  carrying  on  the  great  strug- 
gle was  immediately  felt ;  and  as  early  as  the  extra  session 
of  the  summer  of  1861,  additional  customs  duties  were 
imposed.  In  the  next  regular  session,  in  December,  1861, 
a  still  further  increase  of  duties  was  made.  From  that 
time  till  1865  no  session,  indeed,  hardly  a  month  of  any 
session,  passed  in  which  some  increase  of  duties  on  im- 
ports was  not  made.  During  the  four  years  of  the  war 
every  resource  was  strained  for  carrying  on  the  great 
struggle.  Probably  no  country  has  seen,  in  so  short  a 
time,  so  extraordinary  a  mass  of  financial  legislation.  A 
huge  national  debt  was  accumulated ;  the  mischievous 
expedient  of  an  inconvertible  paper  currency  was  resorted 
to ;  a  national  banking  system  unexpectedly  arose  from 
the  confusion ;  an  enormous  system  of  internal  taxation 
was  created  ;  the  duties  on  imports  were  vastly  increased 
and  extended.  We  are  concerned  here  only  with  the 
change  in  the  tariff ;  yet  it  must  be  borne  in  mind  that 

est  evil,  next  to  a  ruinous  competition  from  foreign  sources,  is  an  excessive 
protection,  which  stimulates  a  like  ruinous  and  irresponsible  competition  at 
home," — Congress.  Globe,  1859-60,  p.  1867.  Mr.  Sherman  said  :  "  When 
Mr.  Stanton  says  the  manufacturers  are  urging  and  pressing  this  bill,  he 
says  what  he  must  certainly  know  is  not  correct.  The  manufacturers  have 
asked  over  and  over  again  to  be  let  alone.  The  tariff  of  1857  is  the  manu- 
facturers' bill ;  but  the  present  bill  is  more  beneficial  to  the  agricultural  in- 
terest than  the  tariff  of  1857." — Ibid.,  p.  2053.  Cf.  Hunter's  Speech, 
Ibid.,  p.  3010.  In  later  years  Mr.  Morrill  himself  said  that  the  tariff  of 
1 86 1  "  was  not  asked  for,  and  but  coldly  welcomed,  by  manufacturers,  who 
always  and  justly  fear  instability." — Congr.  Globe,  1869-70,  p.  3295. 


THE  WAR  TARIFF.  l6l 

these  changes  were  only  a  part  of  the  great  financial  meas- 
ures which  the  war  called  out.  Indeed,  it  is  impossible  to 
understand  the  meaning  of  the  changes  which  were  made 
in  the  tariff  without  a  knowledge  of  the  other  legislation 
that  accompanied  it,  and  more  especially  of  the  extended 
system  of  internal  taxation  which  was  adopted  at  the 
same  time.  To  go  through  the  various  acts  for  levying 
internal  taxes  and  imposing  duties  on  imports  is  not  neces- 
sary in  order  to  make  clear  the  character  and  bearing  of 
the  legislation  of  the  war.  It  will  be  enough  to  describe 
those  that  are  typical  and  important.  The  great  acts  of 
1862  and  1864  are  typical  of  the  whole  course  of  the  war 
measures;  and  the  latter  is  of  particular  importance, 
because  it  became  the  foundation  of  the  existing  tariff 
system. 

It  was  not  until  1862  that  the  country  began  to  appre- 
ciate how  great  must  be  the  efforts  necessary  to  suppress 
the  Rebellion,  and  that  Congress  set  to  work  in  earnest  to 
provide  the  means  for  that  purpose.  Even  in  1862  Con- 
gress relied  more  on  selling  bonds  and  on  issuing  paper- 
money  than  on  immediate  taxation.  But  Tax  and 
two  vigorous  measures  were  resorted  to  for  tariff  acts  of 
taxing  the  people  immediately  and  directly. 
The  first  of  these  was  the  internal  revenue  act  of 
July  i,  1862.  This  established  a  comprehensive  system 
of  excise  taxation.  Specific  taxes  were  imposed  on 
the  production  of  iron  and  steel,  Coal-oil,  paper,  leather, 
and  other ,  articles.  A  general  ad-valorem  tax  was 


1 62  HISTORY  OF  THE  EXISTING  TARIFF. 

imposed  on  other  manufactures.  In  addition,  licenses 
were  required  in  many  callings.  A  general  income  tax 
was  imposed.  Railroad  companies,  steamboats,  express 
companies  were  made  to  pay  taxes  on  their  gross  receipts. 
Those  who  have  grown  to  manhood  since  the  great  strug- 
gle closed  find  it  difficult  to  imagine  the  existence  and  to 
appreciate  the  burden  of  this  heavy  and  vexatious  mass 
of  taxation ;  for  it  was  entirely  swept  away  within  a  few 
years  after  the  end  of  the  war. 

The  second  great  measure  of  taxation  to  which  Con- 
gress turned  at  this  time  was  the  tariff  act  of  July  14, 
1862.  The  object  of  this  act,  as  was  stated  by  Messrs. 
Morrill  and  Stevens,  who  had  charge  of  its  passage  in  the 
House,  was  primarily  to  increase  duties  only  to  such  an 
extent  as  might  be  necessary  in  order  to  offset  the  inter- 
nal taxes  of  the  act  of  July  1st.1  But  although  this  was  the 
chief  object  of  the  act,  protective  intentions  were  enter- 
tained by  those  who  framed  it,  and  were  carried  out. 
Both  Messrs.  Morrill  and  Stevens  were  avowed  protec- 
tionists, and  did  not  conceal  that  they  meant  in  many 
cases  to  help  the  home  producer.  The  increase  of  duties 
on  articles  which  were  made  in  this  country  was  therefore, 

1  Mr.  Morrill  said,  in  his  speech  introducing  the  tariff  bill  :  "It  will  be 
indispensable  for  us  to  revise  the  tariff  on  foreign  imports,  so  far  as  it  may 
be  seriously  disturbed  by  any  internal  duties,  and  to  make  proper  repara- 
tion. *  *  *  If  we  bleed  manufacturers,  we  must  see  to  it  that  the  proper 
tonic  is  administered  at  the  same  time." — Congr.  Globe,  1861-62,  p.  1196. 
Similarly  Mr.  Stevens  said  :  "We  intended  to  impose  an  additional  duty 
on  imports  equal  to  the  tax  which  had  been  put  on  the  domestic  articles.  It 
was  done  by  way  of  compensation  to  domestic  manufacturers  against  foreign 
importers." — Ibid.,  p.  2979. 


THE  WAR  TARIFF.  1 63 

in  all  cases,  at  least  sufficient  to  afford  the  domestic  pro- 
ducers compensation  for  the  internal  taxes  which  they  had 
to  pay.  In  many  cases  it  was  mor^  than  sufficient  for  this 
purpose,  and  brought  about  a  distinct  increase  of  protec- 
tion. Had  not  the  internal  revenue  act  been  passed, 
affording  a  good  reason  for  some  increase  of  duties ;  had 
not  the  higher  taxation  of  purely  revenue  articles,  like 
tea  and  coffee,  been  a  justifiable  and  necessary  expedient 
for  increasing  the  government  income ;  had  not  the 
increase  even  of  protective  duties  been  quite  defensible  as 
a  temporary  means  for  the  same  end  ;  had  not  the  general 
feeling  been  in  favor  of  vigorous  measures  for  raising  the 
revenue ; — had  these  conditions  not  existed,  it  would  have 
been  very  difficult  to  carry  through  Congress  a  measure 
like  the  tariff  of  1862.  But,  as  matters  stood,  the  tariff 
was  easily  passed.  Under  cover  of  the  need  of  revenue 
and  of  the  intention  to  prevent  domestic  producers  from 
being  unfairly  handicapped  by  the  internal  taxes,  a  clear 
increase  of  protection  was  in  many  cases  brought  about. 
The  war  went  on ;  still  more  revenue  was  needed. 
Gradually  Congress  became  convinced  of  the  necessity  of 
resorting  to  still  heavier  taxation,  and  of  the  willingness 
of  the  country  to  pay  all  that  was  necessary  to  maintain 
the  Union.  Passing  over  less  important  acts,  we  have  to 
consider  the  great  measure  that  was  the  climax  of  the 
financial  legislation  of  the  war.  The  three  revenue  acts 
of  June  30,  1864,  practically  form  one  measure,  and  that 
probably  the  greatest  measure  of  taxation  which  the 


164  HISTORY  OF  THE  EXISTING  TARIFF. 

world  has  seen.  The  first  of  the  acts  provided  for  an 
enormous  extension  of  the  internal-tax  system  ;  the 
second  for  a  corresponding  increase  of  the  duties  on  im- 
ports ;  the  third  authorized  a  loan  of  $400,000,000. 

The  internal  revenue  act  was  arranged,  as  Mr.  David 
Internal  ^"  Wells  has  said,  on  the  principle  of  the 
revenue  act,  Irishman  at  Donnybrook  fair ;  "  Whenever  you 
see  a  head,  hit  it  ;  whenever  you  see  a  conru 
modity,  tax  it."  Every  thing  was  taxed,  and  taxed 
heavily.  Every  ton  of  pig-iron  produced  was  charged  two 
dollars ;  every  ton  of  railroad  iron  three  dollars ;  sugar 
paid  two  cents  a  pound  ;  salt,  six  cents  a  hundred-weight. 
The  general  tax  on  all  manufactures  produced  was  five 
per  cent.  But  this  tax  was  repeated  on  almost  every 
article  in  different  stages  of  production.  Raw  cotton,  for 
instance,  was  taxed  two  cents  a  pound  ;  as  cloth,  it  again 
paid  five  per  cent.  Mr.  Wells  estimated  that  the  govern- 
ment in  fact  collected  between  eight  and  fifteen  per  cent, 
on  every  finished  product.  Taxes  on  the  gross  receipts  of 
railroad,  steamboat,  telegraph,  express,  and  insurance 
companies  were  levied,  or  were  increased  where  already  in 
existence.  The  license-tax  system  was  extended  to 
almost  every  conceivable  branch  of  trade.  The  income 
tax  was  raised  to  five  per  cent,  on  moderate  incomes,  and 
to  ten  per  cent,  on  incomes  of  more  than  $10,000. 
Tariff  act  of  The  tariff  act  of  1864,  passed  at  the  same  time 
1864.  wjth  the  internal  revenue  act,  also  brought  about 
a  great  increase  in  the  rates  of  f  axation.  Like  the  tariff  act 


THE  WAR  TARIFF.  1 65 

of  1862,  that  of  1864  was  introduced,  explained,  amended, 
and  passed  under  the  management  of  Mr.  Morrill,  who 
was  Chairman  of  the  Committee  on  ^/ays  and  Means.  That 
gentleman  again  stated,  as  he  had  done  in  1862,  that  the 
passage  of  the  tariff  act  was  rendered  necessary  in  order 
to  put  domestic  producers  in  the  same  situation,  so  far  as 
foreign  competition  was  concerned,  as  if  the  internal  taxes 
had  not  been  raised.  This  was  one  great  object  of  the 
new  tariff ;  and  it  may  have  been  a  good  reason  for  bring 
ing  forward  some  measure  of  the  kind.  But  it  explains 
only  in  part  the  measure  which  in  fact  was  proposed  and 
passed.  In  1864  the  men  who  were  in  charge  of  the 
national  finances  were  as  prompt  in  taxing  heavily  as 
in  1861  they  had  been  slow  in  taxing  at  all.  Under 
the  pressure  of  almost  unlimited  financial  need,  and 
with  the  conviction  that  a  supreme  effort  was  called 
for,  they  were  willing  to  tax  every  possible  article  at 
the  highest  rate  that  any  one  had  the  courage  to 
suggest.  They  carried  this  method  out  to  its  fullest 
extent  in  the  tariff  act  of  1864,  as  well  as  in  the  tax  act  of 
that  year.  At  the  same  time  these  statesmen  were  pro- 
tectionists, and  did  not  attempt  to  conceal  their  protec- 
tionist leanings.  What  between  their  willingness  to  make 
every  tax  and  duty  as  high  as  possible  for  the  sake  of 
raising  revenue,  and  their  belief  that  high  import  duties 
were  beneficial  to  the  country,  the  protectionists  had  an 
opportunity  such  as  the  country  has  never  before  given 
them.  It  would  be  unfair  to  say  that  Mr.  Morrill,  Mr. 


1 66  HISTORY  OF  THE  EXISTING  TARIFF. 

Stevens,  and  the  other  gentlemen  who  shaped  the  revenue 
laws,  consciously  used  the  urgent  need  of  money  for  the 
war  as  a  means  of  carrying  out  their  protectionist  theories, 
or  of  promoting,  through  high  duties,  private  ends  for 
themselves  or  others.  But  it  is  certain  that  their  method 
of  treating  the  revenue  problems  resulted  in  a  most  unex- 
pected and  extravagant  application  of  protection,  and 
moreover,  made  possible  a  subservience  of  the  public  needs 
to  the  private  gains  of  individuals  such  as  unfortunately 
made  its  appearance  in  many  other  branches  of  the  war 
administration.  There  was  neither  time  nor  disposition 
to  inquire  critically  into  the  meaning  and  effect  of  any 
proposed  scheme  of  rates.  The  easiest  and  quickest 
plan  was  to  impose  the  duties  which  the  domestic 
producers  suggested  as  necessary  for  their  protection. 
Not  only  during  the  war,  but  for  several  years  after  it,  all 
feeling  of  opposition  to  high  import  duties  almost  entirely 
disappeared.  The  habit  of  putting  on  as  high  rates  as 
any  one  asked  had  become  so  strong  that  it  could  hardly 
be  shaken  off ;  and  even  after  the  war,  almost  any  increase 
of  duties  demanded  by  domestic  producers  was  readily 
made.  The  war  had  in  many  ways  a  bracing  and  enno- 
bling influence  on  our  national  life ;  but  its  immediate 
effect  on  business  affairs,  and  on  all  legislation  affecting 
moneyed  interests,  was  demoralizing.  The  line  between 
public  duty  and  private  interests  was  often  lost  sight  of 
by  legislators.  Great  fortunes  were  made  by  changes  in 
legislation  urged  and  brought  about  by  those  who  were 


THE  WAR  TARIFF.  167 

benefited  by  them ;  and  the  country  has  seen  with  sorrow 
that  the  honor  and  honesty  of  public  men  did  not  remain 
undefiled.  The  tariff,  like  other  legislation  on  matters  of 
finance,  was  affected  by  these  causes.  Schemes  for  money- 
making  were  incorporated  in  it,  and  were  hardly  ques- 
tioned by  Congress.  When  more  enlightened  and 
unselfish  views  began  to  make  their  way,  and  protests 
were  made  against  the  abuses  and  excessive  duties  of  the 
war  period,  these  had  obtained,  as  we  shall  see,  too  strong 
a  hold  to  be  easily  shaken  off. 

Such  were  the  conditions  under  which  the  tariff  act  of 
1864  was  passed.  As  in  1862,  three  causes  were  at  work: 
in  the  first  place,  the  urgent  need  of  revenue  for  the  war ; 
in  the  next,  the  wish  to  offset  the  internal  taxes  imposed 
on  domestic  producers ;  and  finally,  the  protectionist 
leanings  of  those  who  managed  our  financial  legislation. 
These  causes  made  possible  a  tariff  act  which  in  ordinary- 
times  would  have  been  summarily  rejected.  It  raised 
duties  greatly  and  indiscriminately, — so  much  so,  that  the 
average  rate  on  dutiable  commodities,  which  had  been 
37.2  per  cent,  under  the  act  of  1862,  became  47.06  per 
cent,  under  that  of  1864.  It  was  in  many  ways  crude 
and  ill-considered ;  it  established  protective  duties  more 
extreme  than  had  been  ventured  on  in  any  previous  tariff 
act  in  our  country's  history ;  it  contained  flagrant  abuses, 
in  the  shape  of  duties  whose  chief  effect  was  to  bring 
money  into  the  pockets  of  private  individuals. 

Nothing  more  clearly  illustrates  the  character  of  this 


168  HISTORY  OF  THE  EXISTING  TARIFF. 

piece  of  legislation,  and  the  circumstances  which  made  its 
enactment  a  possibility,  than  the  public  history  of  its 
passage  through  Congress.  The  bill  was  introduced  into 
the  House  on  June  2d  by  Mr.  Morrill.  General  debate 
on  it  was  stopped  after  one  day.  The  House  then  pro- 
ceeded to  the  consideration  of  amendments.  Almost 
without  exception  amendments  offered  by  Mr.  Morrill 
were  adopted,  and  all  others  were  rejected.  After  two 
days  had  been  given  in  this  way  to  the  amendments,  the 
House,  on  June  4th,  passed  the  bill.  In  the  Senate  much 
the  same  course  was  followed.  The  consideration  of  the 
bill  began  on  June  i6th ;  it  was  passed  on  the  following 
day.  That  is  to  say,  five  days  in  all  were  given  by  the 
two  houses  to  this  act,  which  was  in  its  effects  one  of  the 
most  important  financial  measures  ever  passed  in  the 
United  States.  The  bill  was  accepted  as  it  came  from 
the  Committee  on  Ways  and  Means,  and  was  passed  practi- 
cally without  debate  or  examination. 

This  haste  was  the  natural  result  of  the  critical  stage  of 
affairs  and  the  urgent  need  of  revenue.  As  in  other  parts 
of  the  legislation  of  the  war  period,  the  recommendations 
of  the  Administration  and  of  the  party  leaders  were  acted 
on  promptly  and  with  the  minimum  of  debate.  Ob- 
viously, it  was  not  intended  or  expected  that  measures 
so  enacted  should  become  the  foundation  of  a  permanent 
economic  policy.  Yet  in  several  directions  this  proved 
to  be  the  result,  and  in  none  more  strikingly  than  in  the 
final  outcome  of  the  tariff  changes.  The  legal-tender 


THE  WAR    TARIFF.  169 

paper,  resorted  to  as  a  war  measure  more  distinctly  than 
any  other,  was  retained,  it  is  true;  but  at  least  specie 
payments  were  resumed,  even  though  after  an  interval 
unexpectedly  long,  and  the  greatest  evils  of  inconvertible 
money  were  done  away  with.  The  national-banking 
system,  from  the  first  more  clearly  designed  to  be  a 
permanent  institution,  was  also  retained,  though  with 
changes  and  vicissitudes  not  dreamed  of  at  the  time  of 
its  foundation.  The  national  debt  was  reduced  at  a  rate 
unexampled  in  history.  Most  of  the  internal  taxes  were 
repealed  as  fast  as  possible,  leaving  only  those  on  spirits 
and  tobacco  as  permanent  parts  of  the  federal  fiscal 
system.  The  tariff  was  changed  least  of  all.  Some 
significant  modifications  in  the  revenue  duties  were  in- 
deed made,  as  will  be  pointed  out  in  the  following  chap- 
ters. But  on  almost  all  the  articles  with  which  the 
protective  controversy  is  concerned  the  rates  of  the  act 
of  1864  were  retained,  virtually  without  change,  for 
twenty  years  or  more;  and  when  changes  were  finally 
made,  they  were  undertaken  as  if  these  rates  were  not  in 
any  sense  exceptional,  but  were  the  normal  results  of  an 
established  policy. 

The  identical  duties  fixed  in  1864  were  left  in  force  for 
a  long  series  of  years.1  When  a  general  revision  came  to 

1  It  should  be  stated  that  the  act  of  1864  was  not  in  form  a  general  act, 
repealing  all  previous  statutes.  It  left  in  force,  for  instance,  all  provisions 
of  the  Morrill  tariff  of  1861  and  of  the  act  of  1862,  not  specifically  affected 
by  its  provisions.  But  it  changed  so  generally  the  range  of  import  duties, 
\nd  especially  the  protective  duties,  that  it  had  practically  the  effect  of  a 
•*ew  general  tariff  act. 


HISTORY  OF   THE  EXISTING   TARIFF. 

be  made,  in  1883,  they  had  ceased  to  be  thought  of  as 
the  results  of  war  legislation.  The  public,  and  especially 
the  protected  industries,  had  come  to  think  of  them  as 
parts  of  a  permanent  policy.  Thus  habituated  to  high 
duties,  it  was  not  a  difficult  step  for  Congress,  under  the 
stress  of  political  contention,  to  proceed  to  duties  still 
higher.  Hence  the  war  tariff,  though  from  time  to  time 
patched,  amended,  revised,  not  only  remained  in  force  in 
its  important  provisions  for  nearly  twenty  years,  but  be- 
came in  time  the  basis  for  an  even  more  stringent  appli- 
cation of  protection.  The  steps  by  which  this  unexpected 
transformation  in  the  customs  policy  of  the  United  States 
was  brought  'about  will  be  followed  in  the  ensuing  chap- 
ters. 


CHAPTER  II. 

THE  FAILURE  TO  REDUCE  THE  TARIFF  AFTER  THE  WAR. 

WHEN  the  war  closed,  the  revenue  acts  which  had  been 
hastily  passed  during  its  course  constituted  a  chaotic  mass. 
Congress  and  the  Secretary  of  the  Treasury  immediately 
set  to  work  to  bring  some  order  into  this  chaos,  by  fund- 
ing and  consolidating  the  debt,  by  contracting  the  paper 
currency,  and  by  reforming  and  reducing  the  internal 
taxes.1  The  years  between  1865  and  1870  are  full  of  dis- 
cussions and  enactments  on  taxation  and  finance.  On 
some  parts  of  the  financial  system,  in  regard  to  which 
there  was  little  disagreement,  action  was  prompt  and 
salutary.  The  complicated  mass  of  internal  taxes  was 
felt  to  be  an  evil  by  all.  It  bore  heavily  and  vexatiously 
on  the  people ;  and  Congress  proceeded  to  sweep  it 
away  with  all  possible  speed.  As  soon  as  the  immense 
floating  debt  had  been  funded,  and  the  extent  of  the 

1  Those  who  wish  to  get  some  knowledge  of  the  confused  character  of  the 
financial  legislation  called  out  by  the  war,  are  referred  to  Mr.  David  A. 
Wells's  excellent  essay  on  "  The  Recent  Financial  Experiences  of  the 
United  States  "  (1872).  Those  who  wish  to  study  more  in  detail  the  course 
of  events  after  the  war  should  read  Mr.  Wells's  reports  as  Commissioner  of 
the  Revenue,  of  1867,  1868,  1869,  and  1870. 

171 


1/2  HISTORY  OF  THE  EXISTING  TARIFF. 

annual  needs  of  the  government  became  somewhat  clear, 
Congress  set  to  work  at  repealing  and  modifying  the  excise 
laws.  It  is  not  necessary  to  enumerate  the  various  steps 

by  which  the  internal-tax  system    was   modi- 
Abolition 

of  the  fied.  Year  after  year  acts  for  reducing  and 
internal  taxes  abolishing  internal  taxes  were  passed.  By  1872 
all  those  which  had  any  connection  with  the 
subject  of  our  investigation — the  protective  duties — 
had  disappeared.1  The  taxes  on  spirits  and  beer, 
those  on  banks,  and  a  few  comparatively  unimportant 
taxes  on  matches,  patent  medicines,  and  other  articles 
were  retained.  But  all  those  taxes  which  bore  heavily  on 
the  productive  resources  of  the  country — those  taxes 
in  compensation  for  which  higher  duties  had  been  im- 
posed in  1862  and  1864 — were  entirely  abolished. 

Step  by  step  with  this  removal  of  the  internal  taxes,  a 
reduction  of  import  duties  should  have  taken  place ;  at 
the  least,  a  reduction  which  would  have  taken  off  those 
additional  duties  that  had  been  put  on  in  order  to  offset 
the  internal  taxes.  This,  however,  Congress  hesitated  to 
undertake.  We  have  seen  in  the  preceding  chapter  that 
the  opportunity  given  by  the  war  system  of  taxation  was 
seized  by  the  protectionists  in  order  to  carry  out  their 
wishes.  It  would  not  be  easy  to  say  whether  at  the  time 
the  public  men  who  carried  out  this  legislation  meant  the 
new  system  of  import  duties  to  be  permanent.  Certainly 
the  war  methods  of  finance  as  a  whole  were  not  meant  to 

1  The  most  important  acts  for  reducing  the  internal  taxes  were  those  of  Julj 
II,  1866  ;  March  2,  1867  ;  March  31.  1868  ;  July  14,  1870  ;  June  6,  1872. 


REDUCTION  OF  THE  TARIFF.  1/3 

remain  in  force  for  an  unlimited  time.  Some  parts  of  the 
tariff  were  beyond  doubt  intended  to  be  merely  tem- 
porary ;  and  the  reasonable  expectation  was  that  the  pro- 
tective duties  would  sooner  or  later  be  overhauled  and 
reduced.  Had  the  question  been  directly  put  to  almost 
any  public  man,  whether  the  tariff  system  of  the  war  was 
to  be  continued,  the  answer  would  certainly  have  been  in 
the  negative, — that  in  due  time  the  import  duties  were  to 
be  lowered.1  During  the  years  of  confusion  immediately 
after  the  war  little  was  attempted ;  but  soon  a  disposition 
to  affect  some  reform  in  the  incongruous  mass  of  duties 
began  to  be  shown.  Each  year  schemes  for  reduction  and 
reform  were  brought  forward.  Commissions  were  ap- 
pointed, bills  were  elaborated  and  considered ;  but  the 
reform  was  put  off  from  year  to  year.  The  pressure  from 
the  interested  domestic  producers  was  strong  ;  the  power 
of  the  lobby  was  great ;  the  overshadowing  problem  of 
reconstruction  absorbed  the  energies  of  Congress.  Gradu- 

1  As  late  as  1870,  Mr.  Morrill  said  :  "  For  revenue  purposes,  and  not 
solely  for  protection,  fifty  per  cent,  in  many  instances  has  been  added  to  the 
tariff  [during  the  war]  to  enable  our  home  trade  to  bear  the  new  but  indis- 
pensable burdens  of  internal  taxation.  Already  we  have  relinquished  most 
of  such  taxes.  So  far,  then,  as  protection  is  concerned  *  *  *  we  might 
safely  remit  a  percentage  of  the  tariff  on  a  considerable  share  of  our  foreign 
importations.  *  *  *  It  is  a  mistake  of  the  friends  of  a  sound  tariff  to 
insist  on  the  extreme  rales  imposed  during  the  -war,  if  less  will  raise  the 
necessary  revenue.  *  *  *  Whatever  percentage  of  duties  was  imposed 
on  foreign  goods  to  cover  internal  taxation  on  home  manufactures,  should 
not  now  be  claimed  as  the  lawful  prize  of  protection,  when  such  taxes  have 
been  repealed.  There  is  no  longer  an  equivalent." — Congress.  Globe,  1869- 
70,  p.  3295.  These  passages  occur  at  the  end  of  a  long  speech  in  favor  of 
the  principle  of  protection. 


174  HISTORY  OF  TH£  EXISTING  TARIFF. 

ally,  as  the  organization  of  industry  in  the  country 
adapted  itself  more  closely  to  the  tariff  as  it  was,  the  feel- 
ing that  no  reform  was  needed  obtained  a  strong  hold.  Many 
industries  had  grown  up,  or  had  been  greatly  extended, 
under  the  influence  of  the  war  legislation.  As  that  legis- 
lation continued  unchanged,  still  more  capital  was  em- 
barked in  establishments  whose  existence  or  prosperity  was 
in  some  degree  dependent  on  its  maintenance.  All  who 
were  connected  with  establishments  of  this  kind  asserted 
that  they  would  be  ruined  by  any  change.  The  business 
world  in  general  tends  to  be  favorable  to  the  maintenance 
of  things  as  they  are.  The  country  at  large,  and  especially 
those  parts  of  it  in  which  the  protected  industries  were 
concentrated,  began  to  look  on  the  existing  state  of 
things  as  permanent.  The  extreme  protective  system, 
which  had  been  at  the  first  a  temporary  expedient  for 
aiding  in  the  struggle  for  the  Union,  adopted  hastily  and 
without  any  thought  of  deliberation,  gradually  became 
accepted  as  a  permanent  institution.  From  this  it  was  a 
short  step,  in  order  to  explain  and  justify  the  existing 
state  of  things,  to  set  up  high  protection  as  a  theory  and 
a  dogma.  The  restraint  of  trade  with  foreign  countries, 
by  means  of  import  duties  of  forty,  fifty,  sixty,  even  a 
hundred  per  cent.,  came  to  be  advocated  as  a  good  thing 
in  itself  by  many  who,  under  normal  circumstances,  would 
have  thought  such  a  policy  preposterous.  Ideas  of  this 
kind  were  no  longer  the  exploded  errors  of  a  small  school 
of  economists ;  they  became  the  foundation  of  the  policy 


REDUCTION  OF  THE  TARIFF.  1 75 

of  a  great  people.  Then  the  mass  of  restrictive  legislation 
which  had  been  hurriedly  piled  up  during  the  war,  was 
strengthened  and  completed,  and/made  into  a  firm  and 
consistent  edifice.  On  purely  revenue  articles,  such  as 
are  not  produced  at  all  in  the  country,  the  duties  were  al- 
most entirely  abolished.  A  few  raw  materials,  it  is  true, 
were  admitted  at  low  rates,  or  entirely  free  of  duty.  But 
these  were  exceptions,  made  apparently  by  accident.  As 
a  rule,  the  duties  on  articles  produced  in  the  country,  that 
is,  the  protective  duties,  were  retained  at  the  war  figures, 
or  raised  above  them.  The  result  was  that  the  tariff 
gradually  became  exclusively  and  distinctly  a  protective 
measure  ;  it  included  almost  all  the  protective  duties  put 
on  during  the  war,  added  many  more  to  them,  and  no 
longer  contained  the  purely  revenue  duties  of  the  war. 

We  turn  now  to  a  somewhat  more  detailed  account  of 
the  process  by  which  the  reform  of  the  tariff  was  pre- 
vented. To  give  a  complete  account  of  the  various  tariff 
acts  which  were  passed,  or  of  the  tariff  bills  which  were 
pressed  without  success,  is  needless.  Every  session  of 
Congress  had  its  array  of  tariff  acts  and  tariff  bills  ;  and 
we  may  content  ourselves  with  an  account  of  those  which 
are  typical  of  the  general  course  of  events.  Of  the  at- 
tempts at  reform  which  were  made  in  the  years  imme- 
diately after  the  war,  the  fate  of  the  tariff  Unsuccessful 
bills  of  1867  is  characteristic.  Two  proposals  tariff  bill 
were  then  before  Congress:  one  a  bill  passed  7* 

by  the  House  at  the  previous  session  ;   the  other  a  bill 


1 76"  HISTORY  OF  THE  EXISTING  TARIFF. 

prepared  by  Mr.  David  A.  Wells,  then  Special  Com. 
missioner  of  the  Revenue,  and  heartily  approved  by 
Secretary  McCulloch.  The  great  rise  in  prices  and  in 
money  wages  in  these  years,  and  the  industrial  embar- 
rassment which  followed  the  war,  had  caused  a  demand 
for  still  higher  import  duties;  the  House  bill  had  been 
framed  to  answer  this  demand,  and  proposed  a  general 
increase.  Mr.  Wells  recommended  a  different  policy 
He  had  not  then  become  convinced  of  the  truth  of  the 
principles  of  free  trade  ;  but  he  had  clearly  seen  that  the 
indiscriminate  protection  which  the  war  tariff  gave,  and 
which  the  House  bill  proposed  to  augment,  could  not  be 
beneficial.  His  bill  reduced  duties  on  raw  materials,  such 
as  scrap-iron,  coal,  lumber,  hemp,  and  flax  ;  and  it  either 
maintained  without  change  or  slightly  lowered  the  duties 
on  most  manufactured  articles.  A  careful  rearrangement 
was  at  the  same  time  made  in  the  rates  on  spices,  chemi- 
cals, dyes,  and  dye-woods, — articles  of  which  a  careful 
and  detailed  examination  is  necessary  for  the  determina- 
tion of  duties,  and  in  regard  to  which  the  tariff  contained 
then,  as  it  does  now,  much  that  was  arbitrary  and  inde- 
fensible. Mr.  Wells's  bill,  making  these  reforms,  gained 
the  day  over  the  less  liberal  House  bill.  It  was  passed  by 
the  Senate,  as  an  amendment  to  the  House  bill,  by  a  large 
majority  (27  to  10).  In  the  House  there  was  also  a  ma- 
jority in  its  favor ;  but  unfortunately  a  two-thirds  majori- 
ty was  necessary  in  order  to  suspend  the  mles  and  bring 
it  before  the  House.  The  vote  was  106  *  ->  64  in  favor  of 


REDUCTION  OF  THE  TARIFF.  177 

the  bill ;  the  two-thirds  majority  was  not  obtained,  and 
it  failed  to  become  law.  The  result  was  not  only  that  no 
general  tariff  bill  was  passed  at  this  session,  but  the  course 
of  tariff  reform  for  the  future  received  a  regrettable  check. 
Had  Mr.  Wells's  proposals  been  enacted,  it  is  not  unlikely 
that  the  events  of  the  next  few  years  would  have  been 
very  different  from  what  in  fact  they  were.  It  would  be 
too  much  to  say  that  these  proposals  looked  forward  to 
still  further  steps  in  the  way  of  moderating  the  protective 
system,  or  that  their  favorable  reception  showed  any  dis- 
tinct tendency  against  protection.  There  was  at  that 
time  no  free-trade  feeling  at  all,  and  Mr.  Wells's  bill  was 
simply  a  reform  measure  from  the  protectionist  point  of 
view.  But  the  vote  on  it  is  nevertheless  significant  of  the 
fact  that  the  extreme  and  uncompromising  protective 
spirit  was  not  then  all-powerful.  The  bill,  it  is  true,  had 
been  modified  in  a  protectionist  direction  in  various  ways 
before  it  came  to  be  voted  on  ;  but  the  essential  reductions 
and  reforms  were  still  contained  in  it  and  the  votes  show 
that  the  protectionist  feeling  was  far  from  being  solidified 
at  that  time  to  the  extent  that  it  came  to  be  a  few  years 
later.  Had  the  bill  of  1867  been  passed,  the  character  of 
recent  tariff  legislation  might  have  been  very  different. 
A  beginning  would  have  been  made  in  looking  at  the 
tariff  from  a  sober  point  of  view,  and  in  reducing  duties 
that  were  clearly  pernicious.  The  growing  habit  of  look- 
ing on  the  war  rates  as  a  permanent  system  might  have 
been  checked,  and  the  attempts  at  tariff  reform  in  subse- 


178  HISTORY  OF  THE  EXISTING  TARIFF. 

quent  years  would  probably  have  found  stronger  support 
and  met  with  less  successful  opposition.  From  this  time 
till  the  tariff  act  of  1883  was  passed,  there  was  no  general 
tariff  bill  which  had  so  good  a  chance  of  being  passed. 
The  failure  of  the  attempt  of  1867  encouraged  the  protec- 
tionists in  fighting  for  the  retention  of  the  war  duties 
wherever  they  could  not  secure  an  increase  over  and 
above  them  ;  and  in  this  contest  they  were,  with  few 
exceptions,  successful.1 

Of  the  legislation  that  was  in  fact  carried  out,  the  act  of 
Act  of  1870.  1870  is  a  fair  example.  It  was  passed  in  compli- 
ance with  the  demand  for  a  reduction  of  taxes  and  for  tar- 
iff reform,  which  was  at  that  time  especially  strong  in  the 
West,  and  was  there  made  alike  by  Republicans  and  Dem- 
ocrats.2 The  declared  intention  of  those  who  framed  it  and 

1  Mr.  Wells's  bill  and  the  rates  proposed  in  the  House  bill  may  be  found 
in  his  report  for  1866-67,  pp.  235-290.  The  principle  of  "  enlightened 
protection  "  on  which  he  proceeded  is  stated  on  p.  34.  At  this  time  Mr. 
Wells  was  still  a  protectionist ;  it  was  not  until  he  prepared  his  report  for 
1868-69  that  he  showed  himself  fully  convinced  of  the  unsoundness  of  the 
theory  of  protection.  His  able  investigations  and  'the  matter-of-fact  tone  of 
all  of  his  reports  gave  much  weight  to  his  change  of  opinion,  and  caused  it 
to  strengthen  greatly  the  public  feeling  in  favor  of  tariff  reform. 

8  President  Garfield  (then  Representative)  said  in  1870  :  "  After  studying 
the  whole  subject  as  carefully  as  I  am  able,  I  am  firmly  of  the  opinion  that 
the  wisest  thing  that  the  protectionists  in  this  House  can  do  is  to  unite  on  a 
moderate  reduction  of  duties  on  imported  articles.  *  *  *  If  I  do  not 
misunderstand  the  signs  of  the  times,  unless  we  do  this  ourselves,  prudently 
and  wisely,  we  shall  before  long  be  compelled  to  submit  to  a  violent  reduc- 
tion, made  rudely  and  without  discrimination,  which  will  shock,  if  not 
shatter,  all  our  protected  industries." — Young's  Report,  p.  clxxii.  It  is 
worthy  of  remark  that  Mr.  Garfield  had  also  supported  earnestly  the  unsuc- 
cessful bill  of  1867.  He  had  appealed  to  his  party  to  vote  so  as  to  make  up 
the  two-thirds  majority  necessary  for  its  consideration,  telling  them  that  later 


REDUCTION  OF  THE  TARIFF.  1 79 

had  charge  of  it  in  Congress  was  to  reduce  taxation.  But 
the  reductions  made  by  it  were,  almost  without  exception, 
on  purely  revenue  articles.  The  dutk^  on  tea,  coffee,  wines 
sugar,  molasses,  and  spices  were  lowered.  Other  articles 
of  the  same  kind  were  put  on  the  free  list.  The  only 
noteworthy  reduction  in  the  protective  parts  of  the  tariff 
was  in  the  duty  on  pig-iron,  which  went  down  from  $9.00 
to  $7.00  a  ton.  On  the  other  hand,  a  very  considerable 
increase  of  duties  was  made  on  a  number  of  protected 
articles — on  steel  rails,  on  marble,  on  nickel,  and  on  other 
articles.1  We  shall  have  occasion  to  refer  to  some  of  these 
indefensible  exactions  in  another  connection.'  At  present 
we  are  concerned  only  with  the  reductions  of  duty  which 
were  carried  out.  Among  the  protective  duties  the  lower- 
ing of  that  on  pig-iron  was  the  only  one  of  importance. 
This  change,  indeed,  might  well  have  been  made  at  an 
earlier  date,  for  the  internal  tax  of  $2.00  on  pig-iron  (in 
compensation  for  which  the  tariff  rate  had  been  raised  to 
$9.00  in  1864)  had  been  taken  off  as  early  as  i866.3 

The  only  effort  to  reform  the  protective  parts  of  the 
tariff   which   had  any  degree   of   success,  was  made    in 

they  might  "make  up  their  record"  by  voting  against  it. — Congr.  Globe, 
1866-67,  pp.  1657,  1658. 

1  An  increase  in  the  duties  on  bar-iron  was  also  proposed  in  the  bill  as 
reported  by  the  Committee  on  Ways  and  Means  ;  but  this,  fortunately,  was 
more  than  could  be  carried  through.     See  the  speeches  of  Messrs.  Brooks 
(Congr.  Globe,  1869-70,  part  7,  appendix,  pp.  163-167)  and  Allison  (ibid., 
p.  192  et  seq.},  which  protest  against  the  sham  reductions  of  the  bill. 

2  See  chapter  iii. 

3  See  the  list  of  reductions  made  by  the  act  of  1870  in  Young's  Report,  p. 
clxxvii. 


180  HISTORY  OF  THE  EXISTING  TARIFF. 

1872.  The  tactics  of  the  protectionists  in  that  year 
illustrate  strikingly  the  manner  in  which  attempts  at 
tariff  reform  have  been  frustrated  ;  and  the  history  of 
the  attempt  is,  from  this  point  of  view,  so  instructive 
that  it  may  be  told  somewhat  in  detail.  The  situation 
Situation  in  in  1 872  was  in  many  ways  favorable  for  tariff 
1872.  reform.  The  idea  of  tax  and  tariff  reform 
was  familiar  to  the  people  at  large.  It  was  not  as  yet 
openly  pretended  that  the  protective  duties  were  to 
remain  indefinitely  as  they  had  been  fixed  in  the  war. 
The  act  of  1870  had  made  a  concession  by  the  reduc- 
tion on  pig-iron ;  further  changes  of  the  same  kind  were 
expected  to  follow.  Moreover,  the  feeling  in  favor  of 
tariff  reform  was  in  all  these  years  particularly  strong 
in  the  West.  So  strong  was  it  that,  as  has  already  been 
noted,  it  overrode  party  differences,  and  made  almost  all 
the  Western  Congressmen,  whether  Democrats  or  Repub- 
licans, act  in  favor  of  reductions  in  the  tariff.  The  cause 
of  this  state  of  things  is  to  be  found  in  the  economic  con- 
dition of  the  country  from  the  end  of  the  war  till  after  the 
panic  of  1873.  The  prices  of  manufactured  goods  were 
then  high,  and  imports  were  large.  On  the  other  hand, 
exports  were  comparatively  small  and  the  prices  of  grain 
and  provisions  low.  The  agricultural  population  was 
far  from  prosperous.  The  granger  movement,  and  the 
agitation  against  the  railroads,  were  one  result  of  the 
depressed  condition  of  the  farmers.  Another  result  was 
the  strong  feeling  against  the  tariff,  which  the  farmers 


REDUCTION  OF  THE  TARIFF.  l8l 

rightly  believed  to  be  among  the  causes  of  the  state  of 
things  under  which  they  were  suffering.1  Their  represen- 
tatives in  Congress  were  therefore  compelled  to  take  a 
stand  in  favor  of  lowering  the  protective  duties.  The 
Western  members  being  nearly  all  agreed  on  this  subject, 
Congress  contained  a  clear  majority  in  favor  of  a  reform 
in  the  tariff.  Party  lines  at  that  time  had  little  influence 
on  the  protective  controversy,  and,  although  both  houses 
were  strongly  Republican,  a  strong  disposition  showed 
itself  in  both  in  favor  of  measures  for  lowering  the  pro- 
tective duties. 

Added  to  all  this,  the  state  of  the  finances  demanded 
immediate  attention.  In  1872,  as  later  in  1883  and  in 
1890,  a  redundant  revenue  compelled  Congress  to  take 
action  of  some  sort  on  the  tariff  as  the  chief  source  of 
federal  income.  In  each  of  the  fiscal  years  1870-71  and 
1871—72,  the  surplus  revenue,  after  paying  all  appropria- 
tions and  all  interest  on  the  public  debt,  amounted  to 
about  $100,000,000,  a  sum  greatly  in  excess  of  any  re- 
quirements of  the  sinking  fund.  The  government  was 
buying  bonds  in  the  open  market  in  order  to  dispose  of 
the  money  that  was  flowing  into  the  treasury  vaults.* 

1  No  satisfactory  investigation  of  the  period  preceding  the  crisis  of  1873 
has  yet  been  made.  Of  the  fact  that  the  situation  was  especially  depressing 
for  the  agricultural  parts  of  the  country,  there  can  be  no  doubt.  The 
speculative  mania  and  the  fictitious  prosperity  of  those  years  were  felt  most 
strikingly  in  manufactures  and  railroad  building  ;  exactly  why  so  little  effect 
of  this  appeared  in  agriculture  has  never  been  clearly  explained.  The  whole 
period  will  repay  careful  economic  study. 

a  On  account  of  the  low  premium  on  bonds  and  the  high  premium  on  gold, 


1 82  HISTORY  OF  THE  EXISTING  TARIFF. 

This  being  the  state  of  affairs,  the  Committee  on 
Ways  and  Means  introduced  into  the  House  a  bill 
which  took  decided  steps  in  the  direction  of  tariff 
Reform  bill  re^orm-  Mr.  Dawes,  of  Massachusetts,  the 
in  chairman  of  the  committee,  was  opposed  to 
the  recommendations  of  the  majority  of  its 
members,  and  therefore  left  the  explanation  and  man- 
agement of  the  bill  to  Mr.  Finkelnburg,  of  Missouri. 
That  gentleman  explained  that  the  committee's  measure 
was  intended  merely  to  "  divest  some  industries  of  the 
superabundant  protection  which  smells  of  monoply, 
and  which  it  was  never  intended  they  should  enjoy  after 
the  wa'r."  1  The  bill  lopped  off  something  from  the  protec- 
tive duties  in  almost  all  directions.  Pig-iron  was  to  be 
charged  $6.00  instead  of  $7.00  a  ton.  The  duties  on  wool 
and  woollens,  and  those  on  cottons,  were  to  be  reduced  by 
about  twenty  per  cent.  Coal,  salt,  and  lumber  were  subjected 
to  lower  duties.  Tea  and  coffee  were  also  to  pay  less ;  but 
the  duties  on  them  were  not  entirely  abolished, — a  circum- 
stance which  it  is  important  to  note  in  connection  with 
subsequent  events.  The  bill  still  left  an  ample  measure  of 
protection  subsisting ;  but  it  was  clearly  intended  to 
bring  about  an  appreciable  and  permanent  reduction  of 
the  war  duties. 

This  bill  was  introduced  into  the  House  in  April.  Be- 
fore that  time  another  bill  had  been  introduced  in  the 

it  was  cheaper  for  the  government  at  that  time  to  buy  bonds  in  the  open  marl*** 
than  to  redeem  them  at  par. 

'See  Mr.  Finkelnburg's  speech,  Congr.  Globe,  1871-72,  pp.  2826-" 


REDUCTION  OF  THE  TARIFF.  183 

Senate,  by  the  committee  of  that  body  on  finance,  which 
also   lowered  duties,  but  by  no  means  in  so 

Ten  per 

incisive   a   manner    as  the    Hous<;    bill.      The  cent,  reduc- 
Senate    bill    simply    proposed   to    reduce    all       tlon 

proposed. 

the  protective  duties  by  ten  per  cent.  When 
the  ten  per  cent,  reduction  was  first  suggested,  it  was 
strongly  opposed  by  the  protected  interests,  whose  rep- 
resentatives, it  is  hardly  necessary  to  say,  were  present 
in  full  force.  They  were  unwilling  to  yield  even  so  small 
a  diminution.  When,  however,  the  House  bill,  making 
much  more  radical  changes,  was  brought  forward  with  the 
sanction  of  a  majority  of  the  Committee  on  Ways  and 
Means,  they  saw  that  an  obstinate  resistance  to  any 
change  might  lead  to  dangerous  results.  A  change  of 
policy  was  accordingly  determined  on.  Mr.  John  L. 
Hayes,  who  had  been  for  many  years  Secre-  polic  f 
tary  of  the  Wool-Manufacturers'  Association,  the  protec- 
and  became  President  of  the  Tariff  Commis-  tionists- 
sion  of  1882,  was  at  that  time  in  Washington  as  agent 
for  the  wool  manufacturers.  Mr.  Hayes  has  given  an 
account  of  the  events  at  Washington  in  1872,  from  which 
it  appears  that  he  was  chiefly  instrumental  in  bringing 
about  the  adoption  of  a  more  far-sighted  policy  by  the 
protectionists.1  Mr.  Hayes  believed  it  to  be  more  easy  to 
defeat  the  serious  movement  in  favor  of  tariff  reform 
by  making  some  slight  concessions  than  by  unconditional 

1  See  the  speech  which  Mr.  Hayes  made,  shortly  after  the  close  of  the  ses- 
sion of  1872,  at  a  meeting  of  the  wool  manufacturers  in  Boston  ;  printed  in 
the  Bulletin  of  the  Wool  Manufacturers \  vol.  iii.,  pp.  283-290. 


1 84  HISTORY  OF  THE  EXISTING  TARIFF. 

opposition.  The  woollen  manufacturers  were  first  induced 
to  agree  to  this  policy  ;  the  Pennsylvania  iron  makers  were 
next  brought  over  to  it ;  and  finally,  the  whole  weight  of 
the  protected  interests  was  made  to  bear  in  the  same 
direction.  As  a  concession  to  the  demand  for  reform,  the 
general  ten  per  cent,  reduction  was  to  be  permitted.  With 
this,  however,  was  to  be  joined  a  sweeping  reduction 
of  the  non-protective  sources  of  revenue:  the  taxes  on 
whiskey  and  tobacco  were  to  be  lowered,  and  the  tea  and 
coffee  duties  were  to  be  entirely  abolished. 

This  plan  of  action  was  successfully  carried  out.  An 
act  for  abolishing  the  duties  on  tea  and  coffee  was  first 
passed.1  This  being  disposed  of,  the  general  tax  and  tariff 
bill  was  taken  up  in  the  House.  The  Senate  had  already 
indicated  its  willingness  to  act  in  the  manner  desired  by 
the  protectionists.  It  had  passed  and  sent  to  the  House 
a  bill  making  the  general  reduction  of  ten  per  cent.,  and 
nothing  remained  but  to  get  the  consent  of  the  House. 
But  this  consent  was  not  easily  obtained.  A  large  num- 
ber of  representatives  were  in  favor  of  a  more  thorough 
and  radical  reform,  and  wished  for  the  passage  of  the  bill 
prepared  by  the  Ways  and  Means  Committee.  But  un- 
fortunately the  reform  forces  were  divided,  and  only  a 
part  of  them  insisted  on  the  Ways  and  Means  bill.  The 
remainder  were  willing  to  accept  the  ten  per  cent,  reduc- 
tion, which  the  protectionists  yielded.  On  the  other  hand, 

1  The  House  had  already  passed,  at  the  extra  session  in  the  spring  of 
1871,  a  bill  for  admitting  tea  and  coffee  free  of  duty.  This  bill  was  now 
taken  up  and  passed  by  the  Senate. 


REDUCTION  OF  THE  TARIFF.  W    f 

the  protectionist  members  were  united.  Messrs.  Kelley 
and  Dawes  led  them,  and  succeeded  in  bringing  their 
whole  force  to  vote  in  favor  of  Jhe  horizontal  reduction. 
The  powerful  influence  of  the  Speaker,  Mr.  Elaine,  was  also 
on  their  side.  They  finally  succeeded  in  having  the  original 
committee  bill  set  aside,  and  in  passing  the  bill  for  the 
ten  per  cent,  reduction.  Most  of  the  revenue  reformers  in 
the  end  voted  for  it,  believing  it  to  be  the  utmost  that 
could  be  obtained.  It  must  be  observed,  how- 

AcL_of  18-72. 

ever,  to  their  credit,  that  the  "  horizontal '  re- 
duction of  the  protective  duties  was  not  the  only  concession 
to  the  reform  feeling  that  was  made  by  the  act  of  1872.  It 
also  contained  a  number  of  minor  but  significant  changes 
of  duty.  The  duty  on  salt  was  reduced  to  one  half  the 
previous  rates ;  for  the  feeling  against  the  war-duty  on 
salt,  which  very  clearly  resulted  in  putting  so  much  money 
into  the  pockets  of  the  Syracuse  and  Saginaw  producers, 
was  too  strong  to  be  resisted.  The  duty  on  coal  was  re- 
duced from  $1.25  to  75  cents  a  ton.  Some  raw  materials,  „ 
of  which  hides  and  paper  stock  were  alone  of  considerable 
importance,  were  admitted  free  of  duty.  The  free  list 
was  also  enlarged  by  putting  on  it  a  number  of  minor 
articles  used  by  manufacturers.  But  the  important 
change  in  the  protective  duties  was  the  ten  per  cent,  re- 
duction, which  applied  to  all  manufactures  of  cotton, 
wool,  iron,  steel,  metals  in  general,  paper,  glass,  and 
leather, — that  is,  to  all  the  great  protective  industries. 
It  is  worth  while  to  dwell  for  a  moment  on  the  abolition 


1 86  HISTORY  OF   THE  EXISTING    TARIFF. 

of  the  duties  on  tea  and  coffee  ;  for  this  change  may  fairly 
be  said  to  have  been  decisive  in  fixing  the  character  of 
our  tariff  system.  The  question  was  whether  the  re- 
duction of  the  revenue  should  be  effected  by  lowering 
the  protective  or  the  non-protective  duties.  As  matters 
stood  in  1872,  the  removal  of  the  tea  and  coffee  duties 
prevented  a  more  extended  reduction  of  the  protective 
duties,  and,  as  we  shall  presently  see,  eventually  left 
these  latter  precisely  at  the  point  at  which  they  had 
been  before. 

The  difference  in  effect  between  duties  on  articles  like 
tea  and  coffee  on  the  one  hand,  and  articles  like  iron  and 
wool  on  the  other,  is  easily  stated.  Both  are  indirect 
taxes,  reaching  the  consumer  in  the  shape  of  higher  prices 
on  the  commodities  he  uses.  But  when  a  duty  is  imposed 
on  an  article  like  tea  and  coffee,  the  whole  increase  in 
price  to  the  consumer  is  offset  by  the  same  amount  of 
revenue  received  by  the  government  ;  whereas  when  a 
duty  is  imposed  on  an  article  like  iron  or  wool,  the  effect 
is  different.  In  the  latter  case  also  the  commodity  is  in- 
creased in  price  to  the  consumer,  and  he  is  thereby  taxed. 
So  far  as  the  articles  continue  to  be  imported,  the  increased 
price,  as  in  the  case  of  tea  and  coffee,  represents  revenue 
received  by  the  government.  But  when  the  consumer 
buys  and  uses  an  article  of  this  kind  made  at  home,  he 
must  pay  an  increased  price,  or  tax,  quite  as  much  as 
when  he  buys  the  imported  article,  with  the  difference 
that  the  tax  is  not  paid  to  the  government,  but  to  the 
home  producer.  The  extra  price  so  received  by  the  home 


REDUCTION  OF  THE  TARIFF.  1 87 

producer  does  not  necessarily,  or  indeed  usually,  yield 
him  exceptionally  high  profits.  It  is  true  that  in  some 
cases  of  more  or  less  perfect  monopoly  he  may  make, 
permanently  or  for  a  long  time,  exceptionally  high  profits  : 
and  in  these  cases  there  is  ground  for  saying  that  the 
protective  system  has  the  effect  of  robbing  Peter  to  pay 
Paul.  But  in  the  majority  of  cases,  where  the  conditions 
of  monopoly  do  not  exist,  the  home  producer,  while  get- 
ting a  higher  price  because  of  the  duty,  does  not  make 
correspondingly  high  profits.  It  may  cost  more,  for  one 
reason  or  another,  to  make  the  article  at  home  than  it 
costs  to  make  it  abroad,  and  the  duty  simply  serves  to 
offset  this  disadvantage  of  the  domestic  producer.  In  not 
a  few  cases,  while  it  may  cost  more  to  make  the  article  at 
home  than  abroad,  the  duty  is  greater  than  the  difference 
in  cost.  Domestic  competition  then  will  cause  the  price 
at  home  to  fall  to  a  point  less  than  the  foreign  price  plus 
the  duty  ;  importation  will  cease  ;  and  yet  a  virtual  tax 
will  still  be  levied  in  the  shape  of  prices  higher  than  those 
which  would  obtain  if  there  were  no  duty.  Whatever  be 
the  details  of  the  working  of  a  protective  duty,  it  is  prima 
facie  less  desirable  than  a  revenue  duty,  on  the  simple 
ground  that  the  tax  serves  not  to  yield  revenue,  but  to 
offset  the  greater  cost  of  making  the  commodity  at 
home.  Whether  the  stimulus  to  domestic  production 
brings  other  benefits  to  the  community,  sufficient  to* 
compensate  for  this  disadvantage  of  protective  duties 
involves  the  whole  problem  of  the  operation  of  inter- 
national trade  ;  indeed,  the  discussion  spreads  over  the 


1 88  HISTORY  OF   THE  EXISTING   TARIFF. 

entire  range  of  economic  principles,  and  can  be  settled 
only  by  reasoning  in  which  all  those  principles  are  taken 
into  account. 

The  history  of  the  duties  on  tea  and  coffee  is  curious. 
In  the  early  days  of  the  Republic,  when  the  need  of 
revenue  was  pressing,  they  were  subjected  to  duties  which 
for  those  times  were  heavy.  But  in  1830,  when  the 
revenue  became  more  than  ample,  and  when  there  was 
also  a  strong  feeling  in  favor  of  maintaining  protective 
duties,  tea,  coffee,  and  cocoa  were  put  on  the  free  list. 
The  situation  in  1830  was  not  unlike  that  in  1872,  except 
that  the  feeling  through  the  North  in  favor  of  maintaining 
the  protective  duties  was  probably  stronger  at  the  earlier 
date.  From  1830  to  the  Civil  War,  these  revenue  articles 
remained  free  of  duty.  The  tariff  acts  of  1846  and  1857, 
though  supposed  to  be  based  on  revenue  principles,  made 
no  attempt  to  secure  revenue  from  this  certain  and  simple 
source.  Protective  duties  are  as  certainly  taxes  as  are 
those  on  tea  and  coffee ;  but  in  the  latter  case  no 
domestic  producers  ask  for  the  retention  of  the  taxes ; 
consequently  the  revenue  duties,  unsupported  by  any 
strong  interest,  are  easy  victims  when  a  curtailment  of  the 
national  revenue  becomes  convenient  or  necessary. 

For  our  present  purpose  it  suffices  to  point  out  that 
the  removal  of  the  tea  and  coffee  duties  in  1872  served  to 
fix  for  a  long  time  the  character  of  our  legislation  on  the 
revenue  articles  of  which  they  are  the  type.  Step  by 
step,  in  the  various  tariff  acts  passed  since  the  war,  all  the 
non-protective  duties  have  been  swept  away.  By  far 


REDUCTION  OF   THE  TARIFF.  189 

the  most  important  recent  legislation  in  this  direction 
was  the  removal  of  the  duties  on  sugar  in  the  act  of 
1890,  a  change  which,  like  the  /removal  of  the  tea  and 
coffee  duties  in  1872,  emphasized  the  determination  of 
the  protectionists  to  give  up  the  simplest  and  surest 
sources  of  revenue  rather  than  yield  an  abatement  of 
the  protective  duties. 

To  return  from  this  digression  to  the  tariff  act  .of  1872. 
The  free-traders  were  on  the  whole  satisfied  with  it ;  they 
thought  it  a  step  in  the  right  direction,  and  the  beginning 
of  a  process  of  reform.  The  protectionists,  however, 
believed  that  they  had  won  a  victory  ;  and,  as  events 
proved,  they  were  right.1 

It  is  not  within  the  purpose  of  this  volume  to  discuss 
the  intrinsic  merits  of  a  "  horizontal  reduction,"  such  as 
was  carried  out  in  the  act  of  1872.  Undoubtedly  it  is 
a  simple  and  indiscriminating  method  of  approaching  the 
problem  of  tariff  reform.  The  objections  to  it  were 
very  prominently  brought  forward  when  Mr.  Morrison, 
during  the  session  of  1883-84,  proposed  to  take  off  ten  per 
cent,  from  the  duties,  in  exactly  the  same  way  that  the 
tariff  of  1872  had  taken  off  ten  per  cent.  It  is  certainly 
curious  that  this  method,  when  proposed  by  Mr.  Morrison 
in  1884,  should  be  vehemently  denounced  by  protectionists 

1  Mr.  Hayes,  in  the  speech  already  referred  to,  spoke  of  "the  grand  re- 
sult of  a  tariff  bill  reducing  duties  fifty-three  millions  of  dollars,  and  yet  leav- 
ing the  great  industries  almost  intact.  The  present  tariff  (of  1872)  was 
made  by  our  friends,  in  the  interest  of  protection."  And  again  :  "A 
reduction  of  over  fifty  millions  of  dollars,  and  yet  taking  only  a  shaving 
off  from  the  protection  duties." 


HISTORY  OF  THE  EXISTING  TARIFF. 

as  crude,  vicious,  unscientific,  and  impractical,  although, 
when  proposed  by  Mr.  Dawes  in  1872,  it  received  their 
earnest  support.  There  is,  however,  one  objection  to 
such  a  plan  which  was  hardly  mentioned  in  connection 
with  Mr.  Morrison's  bill,  but  was  brought  out  very  clearly 
by  the  experience  of  1872.  This  is,  that  a  horizontal  re- 
duction can  very  easily  be  revoked.  The  reduction  made 
in  1872  was  repealed  with  little  difficulty  in  1875.  After 
the  panic  of  1873,  imports  greatly  diminished,  and 
Ten  per  with  them  the  customs  revenue.  No  further 
cent,  reduc-  thought  of  tax  reduction  was  entertained  ; 

tion  re- 
pealed in     an"  soon  a  need  of  increasing  the  revenue  was 

l875-  felt.  In  1875  Congress,  as  one  means  to  that 
end,  repealed  the  ten  per  cent,  reduction,  and  put  du- 
ties back  to  where  they  had  been  before  1872.'  The 
repeal  attracted  comparatively  little  attention,  and  was 

1  It  was  far  from  necessary,  for  revenue  purposes,  to  repeal  the  ten  per 
cent,  clause.  Mr.  Dawes  (who  advocated  in  1875  the  repeal  of  his  own 
measure  of  1872)  attempted  to  show  the  need  of  raising  the  tariff  by  assum- 
ing that  a  fixed  sum  of  $47,000,000  per  year  was  necessary  for  the  sinking- 
fund, — that  the  faith  of  the  government  was  pledged  to  devoting  this  sum  to 
the  redemption  of  the  debt.  But  it  was  very  clearly  shown  that  the 
government  never  had  carried  out  the  sinking-fund  provision  in  any  exact 
way.  In  some  years  it  bought  for  the  sinking  fund  much  less  than  the  one 
per  cent  of  the  debt  which  was  supposed  to  be  annually  redeemed  ;  in  other 
years  (notably  in  1869—73)  it  bought  much  more  than  this  one  per  cent. 
The  same  policy  has  been  followed  in  recent  years.  There  can  be  little 
doubt  that  the  need  of  providing  for  the  sinking  fund  was  used  merely  as  an 
excuse  for  raising  the  duties.  See  Mr.  Wood's  remarks,  Congr.  Record, 
1874-75,  PP-  Il87»  Il88>  and*:/.  Mr.  Beck's  speech,  ibid.,  pp.i4Oi,  1402. 

It  may  be  noted  that  in  1875  President  Grant  and  the  Secretary  of  the 
Treasury  recommended,  and  men  like  Senators  Sherman  and  Schurz  sup- 
ported, a  re-imposition  of  duties  on  tea  and  coffee  as  the  best  means  of  in- 
creasing the  customs  revenues. 


REDUCTION  OF  THE  TARIFF.  19 1 

carried  without  great  opposition.  If  a  detailed  examina- 
tion of  the  tariff  had  been  made  in  1872,  and  if  duties 
had  been  reduced  in  that  year  carefully  and  with  discrimi- 
nation, it  would  have  been  much  more  difficult  in  1875  to 
put  them  back  to  the  old  figures.  If  some  of  the  duties 
which  are  of  a  particularly  exorbitant  or  burdensome 
character  had  been  individually  reduced  in  1872,  public 
opinion  would  not  easily  have  permitted  the  restitution  of 
the  old  rates.  But  the  general  ten  per  cent,  reduction, 
which  touched  none  of  the  duties  in  detail,  was  repealed 
without  attracting  public  attention.  The  old  rates  were 
restored  ;  and  the  best  opportunity  which  the  country 
has  had  for  a  considerable  modification  of  the  protective 
system,  slipped  by  without  any  permanent  result. 

Of  the  attempts  at  reform  which  were  made  between 
1875  and  1883,  little  need  be  said.  Mr.  Morrison  in  1876. 
and  Mr.  Wood  in  1878,  introduced  tariff  bills  into  the 
House.  These  bills  were  the  occasion  of  more  or  less 
debate ;  but  there  was  at  no  time  any  probability  of 
their  being  enacted.1  In  1879  tne  dutv  on  quinine  was 
abolished  entirely, — a  measure  most  beneficial  and  praise- 
worthy in  itself,  but  not  of  any  considerable  importance 
in  the  economic  history  of  the  country. 

Of  the  tariff  act  of  1883  we  do  not  purpose  speaking  in 

1  Those  who  are  interested  in  the  details  of  these  measures  will  find  the 
bill  of  1876  explained  in  Mr.  Morrison's  speech,  in  Cong.  Record,  1875-1876, 
p.  3321.  The  bill  of  1878  was  similarly  explained  by  Mr.  Wood,  Cong 
Record,  1877-78,  p.  2398.  It  was  at  one  time  supposed  that  Mr.  Wood's 
bill  might  be  passed  by  the  House  ;  but  the  enacting  clause  was  struck  out, 
after  some  debate,  by  a  vote  of  137  to  114. 


IQ2  HISTORY  OF  THE  EXISTING  TARIFF. 

this  connection.     It  will  be  discussed  in  detail  in  the  con. 
eluding  pages. 

We  have  now  completed  our  account  of  the  attempts 
to  reform  the  tariff  which  were  made  between  the  close  ot 
,the  Civil  War  and  the  general  revision  of  1883.  It  is  clear 
that  the  duties,  as  they  were  imposed  in  the  act  of  1864, 
were  retained  substantially  without  change  during  the 
whole  of  this  period.  The  non-protective  duties  were 
indeed  swept  away.  A  few  reductions  of  protective 
duties  were  made  in  the  acts  of  1870  and  1872;  but  the 
great  mass  of  duties  imposed  on  articles  which  are  pro- 
duced in  this  country  were  not  touched.  It  is  worth 
while  to  note  some  of  the  more  important  classes  of  goods 
on  which  the  duties  levied  in  1864  remained  in  force,  and 
to  compare  these  duties  with  the  rates  of  the  Morrill 
tariff  of  1861.  The  increase  which  was  the  result  of  the 
war  will  appear  most  plainly  from  such  a  comparison.  In 
the  appended  table1  it  will  be  seen  that  the  rates  on  books, 
chinaware,  and  pottery,  cotton  goods,  linen,  hemp,  and 
jute  goods,  glass,  gloves,  bar-  and  hoop-iron,  iron  rails, 
steel,  lead,  paper,  and  silks,  were  increased  by  from  ten  to 
thirty  per  cent,  during  the  war,  and  that  the  increase  then 
made  was  maintained  without  the  slightest  change  till 
1883.  That  these  great  changes,  at  the  time  when  they 
were  made,  were  not  intended  or  expected  to  be  per- 
manent, cannot  be  denied.  An  example  like  that  of  the 
duty  on  cotton  goods  shows  plainly  how  the  duties  were 

1  See  table  III.,  Appendix. 


REDUCTION  OF  THE  TARIFF.  193 

fixed  during  the  war  according  to  the  .conditions  of  the 
time,  and  without  expectation  of  their  remaining  indefi- 
nitely in  force.  The  duty  on  the  Cheapest  grade  of  cotton 
tissues  had  been  in  1861  fixed  at  one  cent  per  yard. 
During  the  war  the  price  of  cotton  rose  greatly,  and  with 
it  the  prices  of  cotton  goods.  Consequently  it  is  not  sur- 
prising to  find  the  duty  in  1864  to  be  five  cents  per  yard 
on  this  grade  of  cottons.  But  shortly  after  the  war,  raw 
cotton  fell  nearly  to  its  former  price  ;  and  it  does  occasion 
surprise  to  find  that  the  duty  of  five  cents  per  yard  should 
have  been  retained  without  change  till  1883,  and  even  in 
the  act  of  1883  retained  at  a  figure  much  above  that  of 
1 86 1.  The  duty  on  cheap  cottons  happens  not  to  have 
been  particularly  burdensome,  since  goods  of  this  kind  are 
made  in  this  country  as  cheaply  as  they  can  be  made 
abroad.  But  the  retention  of  the  war  duty  on  them,  even 
after  it  became  exorbitantly  high,  is  typical  of  the  way  in 
which  duties  were  retained  on  other  articles  on  which 
they  were  burdensome.  Duties  which  had  been  imposed 
during  the  war,  and  which  had  then  been  made  very  high, 
either  for  reasons  of  revenue  or  because  of  circumstances 
such  as  led  to  the  heavy  rate  on  cottons,  were  retained 
unchanged  after  the  war  ceased.  It  would  be  untrue  to 
say  that  protection  did  not  exist  before  the  great  struggle 
began, — the  tariff  of  1861,  was  a  distinctly  protectionist 
measure ;  but  it  is  clear  that  the  extreme  protectionist 
character  of  our  tariff  is  an  indirect  and  unexpected  result 
of  the  Civil  War. 


CHAPTER  III. 

HOW  DUTIES  WERE  RAISED  ABOVE  THE  WAR  RATES. 

IN  the  preceding  chapter  it  has  been  shown  how  the 
duties  levied  during  the  war  failed  to  be  reduced  after  its 
close.  But  in  many  cases  not  only  has  there  been  a  failure 
to  diminish  the  war  rates,  but  an  actual  increase  over 
them.  We  have  already  noted  how  the  maintenance  of 
the  tariff  of  1864  brought  about  gradually  a  feeling  that 
such  a  system  was  a  good  thing  in  itself,  and  desirable  as 
a  permanent  policy.  This  feeling,  and  the  fact  that  Con- 
gress and  the  public  had  grown  accustomed  to  heavy 
taxes  and  high  rates,  enabled  many  measures  to  become 
law  which  under  normal  circumstances  would  never  have 
been  submitted  to.  In  the  present  chapter  we  are  con- 
cerned with  the  not  infrequent  instances  in  which,  in  obedi- 
ence to  the  demands  of  the  protected  interests,  duties 
were  raised  over  and  above  the  point,  already  high,  at 
which  they  were  left  when  the  war  closed.  The  most 
striking  instance  of  legislation  of  this  kind  is  to  be  found 
in  the  wool  and  woollens  act  of  1867;  a  measure  which 
is  so  characteristic  of  the  complications  of  our  tariff,  of 

the  remarkable  height  to  which  protection  has  been  car- 

194 


HOW  DUTIES  WERE  RAISED.  19$ 

ried  in  it,  and  of  the  submission  of  Congress  and  the 
people  to  the  demands  of  domestic  manu-  Wool  and 
facturers  that  it  deserves  to  J?e  described  woollen  act 
in  detail.  Such  a  description  is  the  more 
desirable  since  the  woollen  schedule  of  our  tariff  is  the 
one  which  imposes  the  heaviest  and  the  least  defensi- 
ble burdens  on  consumers,  and  at  the  same  time  is  the 
most  difficult  of  comprehension  for  those  who  have  noth- 
ing but  the  mere  language  of  the  statute  to  guide  them. 
In  order  to  understand  the  complicated  system  that  now 
exists,  we  must  go  back  to  the  Morrill  tariff  act  of  1861. 
In  that  act  specific  duties  on  wool  were  substituted  for  the 
ad-valorem  rates  of  1846  and  1857.  The  cheaper  kinds  of 
wool,  costing  eighteen  cents  or  less  per  pound,  were  still 
admitted  at  the  nominal  rate  of  five  per  cent.  But  wool 
costing  between  eighteen  and  twenty-four  cents  per  pound 
was  charged  three  cents  per  pound  ;  that  costing  more 
than  twenty-four  cents  was  charged  nine  cents  per  pound. 
The  duties  on  woollens  were  increased  correspondingly. 
An  ad-valorem  rate  of  twenty-five  per  cent,  was  levied  on 
them;  in  addition  they  paid  a  specific  duty  of  tweh  c 
cents  for  each  pound  of  cloth.  This  specific  duty  was 
intended  merely  to  compensate  the  manufacturers  for 
the  duty  on  wool,  while  the  ad-valorem  rate  alone  was  to 
yield  them  any  protection.  This  is  the  first  appearance  in 
our  tariff  history  of  the  device  of  exact  compensating 
duties.  Compensation  for  duties  on  raw  materials  used 
by  domestic  producers  had  indeed  been  provided  for  in 


196  HISTORY  OF  THE  EXISTING  TARIFF. 

previous  tariffs ;  but  it  was  not  until  the  passage  of  the 
Morrill  act  and  of  its  successors  that  it  came  to  be  applied 
in  this  distinct  manner.  As  the  principle  of  compensa- 
tion has  been  greatly  extended  since  1861,  and  is  the  key 
to  the  existing  system  of  woollen  duties,  it  may  be  well  to 
explain  it  with  some  care. 

It  is  evident  that  a  duty  on  wool  must  normally  cause 
The  the  price  of  all  wool  that  is  imported  to 
compensating  rise  by  the  full  extent  of  the  duty.  More- 
over, the  duty  presumably  causes  the  wool 
grown  at  home,  of  the  same  grade  as  that  imported, 
also  to  rise  in  price  to  the  full  extent  of  the  tax.  It 
is  clear  that,  if  foreign  wool  continues  to  be  imported, 
such  a  rise  in  the  price  of  domestic  wool  must  take  place ; 
since  wool  will  not  be  imported  unless  the  price  here  is 
higher,  by  the  amount  of  the  duty,  than  the  price  abroad. 
It  may  happen,  of  course,  that  the  tax  will  prove  prohibi- 
tory, and  that  the  importation  of  foreign  wool  will  cease ; 
in  which  case  it  is  possible  that  the  domestic  wool  is 
raised  in  price  by  some  amount  less  than  the  duty,  and 
even  possible  that  it  is  not  raised  in  price  at  all.  Assum- 
ing for  the  present  (and  this  assumption  was  made  in 
arranging  the  compensating  system)  that  domestic  wool 
does  rise  in  price,  by  the  extent  of  the  duty,  as  compared 
with  foreign  wool,  it  is  evident  that  the  American  manu- 
facturer, whether  using  foreign  or  domestic  wool,  is  com- 
pelled to  pay  more  for  his  raw  material  than  his  com- 
petitor abroad.  This  disadvantage  it  becomes  necessary 


HOW  DUTIES  WERE  RAISED.  197 

to  offset  by  a  compensating  duty  on  foreign  woollens. 
In  1861  the  duty  on  wool  of  the  kind  chiefly  used  in  this 
country  (costing  abroad  between  ten  and  twenty-four 
cents  a  pound)  was  three  cents  a  pound.  The  compen, 
sating  duty  for  this  was  made  twelve  cents  a  pound  on 
the  woollen  cloth,  which  tacitly  assumes  that  about  four 
pounds  of  wool  are  used  for  each  pound  of  cloth.  This 
specific  duty  was  intended  to  put  the  manufacturer  in  the 
same  situation,  as  regards  foreign  competition,  as  if  he 
got  his  wool  free  of  duty.  The  separate  ad-valorem  duty 
of  twenty-five  per  cent,  was  then  added  in  order  to  give 
protection. 

The  compensating  system  was  retained  in  the  acts  of 
1862  and  1864.  During  the  war,  it  is  needless  to  say,  the 
duties  on  wool  and  woollens  were  considerably  raised. 
They  were  increased,  and  to  some  extent  properly  in- 
creased, to  offset  the  internal  taxes  and  the  increased 
duties  on  dye-stuffs  and  other  materials;  and  care  was 
taken,  in  this  as  in  other  instances,  that  Wool  and 
the  increase  in  the  tariff  should  be  sufficient  woollen  du- 
and  more  than  sufficient  to  prevent  the  do-  U 
mestic  producer  from  being  unfairly  handicapped  by 
the  internal  taxes.  In  the  final  act  of  1864  the  duties 
on  wool  were  as  follows : 

On  wool  costing  12  cents  or  less,  a  duty  of  3  cents  per  pound. 

between  12  and  24  cents,  a  duty  of  6  cents  per  pound. 

"        24  and  32  cents,  a  duty  of  10  cents  per  pound, 
plus  ten  per  cent. 

On  wool  costing  more  than  32  cents,  a  duty  of  12  cents  per  pound,  plus  ten 
per  cent.1 

1  Exactly  how  this  duty  on  wool  of  ten  per  cent,  on  the  value,  in  addition 


19$  HISTORY  OF  THE  EXISTING  TARIFF. 

The  wool  chiefly  imported  and  chiefly  used  by  our 
manufacturers  was  that  of  the  second  class,  costing 
between  twelve  and  twenty-four  cents  per  pound,  and 
paying  a  duty  of  six  cents.  The  compensating  duty  on 
woollens  was  therefore  raised  in  1864  to  twenty-four 
cents  per  pound  of  cloth.  The  ad-valorem  (protective) 
duty  on  woollens  had  been  raised  to  forty  per  cent. 

During  the  war  the  production  of  wool  and  woollens 
had  been  greatly  increased.  The  check  to  the  manufacture 
of  cotton  goods,  which  resulted  from  the  stoppage  of  the 
great  source  of  supply  of  raw  cotton,  caused  some  in- 
crease in  the  demand  for  woollens.  The  government's  need 
of  large  quantities  of  cloth  for  army  use  was  also  an  im- 
portant cause.  After  the  war,  a  revolution  was  threatened. 
Cotton  bade  fair  to  take  its  former  place  among  textile 
goods ;  the  government  no  longer  needed  its  woollens,  and 
threw  on  the  market  the  large  stocks  of  army  clothing 
which  it  had  on  hand.  In  the  hope  of  warding  off  the  immi- 
nent depression  of  their  trade,  the  wool  growers  and  manu- 
facturers made  an  effort  to  obtain  still  further  assistance 
from  the  government.  A  convention  of  wool  growers  and 
manufacturers  was  held  in  Syracuse,  N.  Y.,  in  December, 
1865.  That  both  these  classes  of  producers,  as  a  body,  un- 
derstood and  supported  the  views  of  this  meeting,  is  not  at 
all  certain.  The  mass  of  wool  growers  undoubtedly  knew 

to  the  specific  duty,  came  to  be  imposed,  the  writer  has  never  seen  satisfac- 
torily explained.  It  probably  came  into  the  tariff  in  connection  with  the 
discriminating  duty  of  ten  per  cent,  which  was  imposed  on  goods  imported 
in  the  vessels  of  nations  that  had  no  treaty  of  commerce  with  us. 


HOW  DUTIES  WERE  RAISED.  199 

nothing  of  it ;  they  were  represented  chiefly  by  a  few  breed- 
ers of  sheep.  Among  the  manufacturers,  many  held  aloof 
from  it  when  its  character  became^,  somewhat  more  plain. 
There  is  good  evidence  to  show  that  the  whole  movement 
was  the  work  of  a  few  energetic  manufacturers  of 
New  England,  engaged  chiefly  in  producing  carpets  and 
worsted  goods,  and  of  some  prominent  breeders  of  sheep.1 
The  fact  that  the  rates  of  duty,  as  arranged  by  the 
Syracuse  convention,  were  especially  advantageous  to 
certain  manufacturers — namely,  those  who  made  carpets, 
worsted  goods,  and  blankets, — tends  to  support  this  view. 
On  the  surface,  however,  the  movement  appeared  to  be 
that  of  the  growers  and  manufacturers  united.  The 
latter  agreed  to  let  the  wool  producers  advance  the  duty 
on  the  raw  material  to  any  point  they  wished  ;  they  under- 

1  "  This  tariff  (of  1867)  was  devised  by  carpet  and  blanket  makers,  who 
pretended  to  be  '  The  National  Woollen  Manufacturers'  Association,'  in 
combination  with  certain  persons  who  raised  fine  bucks  and  wished  to  sell 
them  at  high  prices,  and  who  acted  in  the  name  of  '  The  National  Wool- 
Growers'  Association.'  *  *  *  A  greater  farce  was  never  witnessed 
*  *  *  Many  who  took  part  in  the  proceedings  of  1866,  finding  that  the 
Association  [of  Wool  Manufacturers]  was  used  for  the  convenience  of  spe- 
cial interests,  have  since  withdrawn." — Harris,  "  Memorial,"  pp.  22,  23. 

Mr.  Harris  says  elsewhere:  "The  carpet  interest  was  predominant  [in 
the  Wool  Manufacturers'  Association].  *  *  *  The  President  was,  and 
is  now  (1871),  a  large  carpet  manufacturer  ;  and  the  Secretary  was  a  very 
talented  and  astute  politician,  from  Washington,  chosen  by  the  influence  of 
the  President."  And  again:  "The  Association  having  spent  considerable 
sums  in  various  ways  peculiar  to  Washington  (the  italics  are  Mr.  Harris's) 
increased  the  annual  tax  on  its  members  very  largely  ;  and  at  the  present 
time  (1871)  it  is  hopelessly  in  debt  to  its  President." — "Protective  Duties," 
pp.  9,  10  ;  "  The  Tariff,"  p.  17.  See  also  "  Argument  on  Foreign  Wool 
Tariff  before  Finance  Committee  of  Senate,"  New  York,  1871. 


200  HISTORY  OF  THE  EXISTING  TARIFF. 

took,  by  means  of  the  compensating  device,  to  prevent 
any  injury  to  themselves  from  the  high  duty  on  the 
wool  they  used.  The  tariff  schedule  which  was  the  result 
of  this  combination  was  approved  by  the  United  States 
Revenue  Commission.1  It  was  made  a  part  of  the  unsuc- 
cessful tariff  bill  of  1867,  already  referred  to3 ;  and  when 
that  bill  failed,  it  was  made  law  by  a  separate  act,  to 
whose  passage  no  particular  objection  seems  to  have  been 
made.  The  whole  course  of  events  forms  the  most  strik- 
ing example — and  such  examples  are  numerous — of  the 
manner  in  which,  in  recent  tariff  legislation,  regard  has 
been  had  exclusively  to  the  producer.  Here  was  an  in- 
tricate and  detailed  scheme  of  duties,  prepared  by  the 
producers  of  the  articles  to  be  protected,  openly  and 
avowedly  with  the  intention  of  giving  themselves  aid  ; 
and  yet  this  scheme  was  accepted  and  enacted  by  the 
National  Legislature  without  any  appreciable  change  from 
the  rates  asked  for.3 

We  turn  now  to  examine  this  act  of  1867,  whose  main 
provisions  were  retained  in  the  acts  of  1883  ancl  l89°»  ancl» 
after  a  brief  period  of  radical  change  under  that  of  1894, 

1  Mr.  Stephen  Colwell,  a  disciple  of  the  Carey  protectionist  school,  was 
the  member  of  this  commission  who  had  charge  of  the  wood  and  woollens 
schedule.  Mr.  Wells,  who  was  also  a  member  of  the  commission,  had 
nothing  to  do  with  this  part  of  the  tariff. 

3  Ante,  p.  21. 

3  The  proceedings  of  the  Syracuse  convention  may  be  found  in  full  in  the 
volume  of  "Transactions  of  the  Wool  Manufacturers"  ;  also  in  "  U.  S. 
Revenue  Report,  1866,"  pp.  360-419.  Mr.  Colwell's  endorsement  of  the 
scheme  is  also  in  "  U.  S.  Revenue  Report,  1866,"  pp.  347-356.  Mr.  Wells, 
in  his  report  of  1867,  sharply  criticised  the  act  as  passed. 


HOW  DUTIES  WERE  RAISED.  2OI 

were  once  more  reinstated  in  the  tariff  of  1897.  In  this 
examination  we  will  follow  the  statement  published  in 
1866,  in  explanation  of  the  new  schedule,  by  the  Execu- 
tive Committee  of  the  National  Association  of  Wool 
Manufacturers.1  To  begin  with,  the  duties  Act  of 


on  wool  were  arranged  on  a  new  plan.  Wool  Duty  on 
was  divided  into  three  classes:  carpet,  cloth- 
ing, and  combing  wool.2  The  first  class,  carpet  wool, 
corresponded  to  the  cheap  wools  of  the  tariff  of 
1864.  The  duty  was  three  cents  a  pound  if  it  cost 
twelve  cents  or  less,  and  six  cents  a  pound  if  it  cost 
more  than  twelve  cents.  The  other  two  classes,  of  cloth- 
ing and  combing  wools,  are  the  grades  chiefly  grown  in 
this  country,  and  therefore  are  most  important  to  note  in 
connection  with  the  protective  controversy.  The  duties 
on  these  were  the  same  for  both  classes.  Clothing  and 
combing  wools  alike  were  made  to  pay  as  follows  : 

Value  32  cents  or  less,  a  duty  of    10  cents   per  pound  and  n  per  cent. 

ad  valorem. 

Value   more  than    32  cents,   a   duty   of    12    cents    per   pound  and  10  per 
cent,  ad  valorem* 

1  See  "  Statement  of  the  Executive  Committee  of  the  Wool  Manufacturers 
Association  to  the  U.  S.  Revenue  Commisson,"  printed  in  "  Transactions," 
as  above  ;  also  printed  in  "  Revenue  Report  for  1866,"  pp.  441-460. 

a  Clothing  wool  is  of  comparatively  short  fibre  ;  it  is  carded  'as  a  preparation 
for  spinning  ;  it  is  used  for  making  cloths,  cassimeres,  and  the  other  common 
woollen  fabrics.  Combing  wool  is  of  longer  fibre  ;  it  is  combed  in  a  comb- 
ing machine  as  a  preparation  for  spinning  ;  and  it  is  used  in  making  worsted 
goods,  and  other  soft  and  pliable  fabrics. 

8  Here  again  we  have  the  rather  absurd  combination  of  specific  and  ad-va- 
lorem duties  on  wool.  In  the  act  of  1867,  there  is  the  further  complication 


2O2  HISTORY  OF  THE  EXISTING  TARIFF. 

Comparing  these  figures  with  the  rates  of  1864,  one  would 
not,  at  first  sight,  note  any  great  change.  In  1864,  wool 
costing  between  twenty-four  and  thirty-two  cents  had  been 
charged  ten  cents  per  pound  plus  ten  per  cent,  ad 
valorem  ;  and  wool  costing  more  than  thirty-two  cents  had 
paid  twelve  cents  a  pound  plus  ten  per  cent.  These  seem 
to  be  almost  exactly  the  rates  of  1867.  But  in  fact,  by 
the  change  in  classification,  a  very  considerable  increase 
in  the  duty  was  brought  about.  In  1867  #//wool  costing 
less  than  thirty-two  cents  was  made  to  pay  the  duty  of  ten 
cents  per  pound  and  eleven  per  cent.  In  1864  wool  cost 
ing  (abroad)  between  eighteen  and  twenty-four  cents  had 
been  charged  only  six  cents  per  pound.  This  is  the  class 
of  wool  chiefly  grown  in  the  United  States,  and  chiefly 
imported  hither;  and  it  was  charged  in  1867  with  the 
duty  of  ten  cents  and  eleven  per  cent.  With  the  ad- 
valorem  addition,  the  duty  of  1867  amounted  to  eleven 
and  a  half  or  twelve  cents  a  pound,  or  about  double 
the  duty  of  1864.  The  consequence  was  that  in  reality 
the  duty  on  that  grade  of  wool  which  is  chiefly  used 
in  this  country  was  nearly  doubled  by  the  act  of  1867  ;  and 
the  increase  was  concealed  under  a  change  in  classification. 
The  duty  on  clothing  and  combing  wools,  as  fixed  in 

that  the  ad-valorem  duty  is  in  the  one  case  ten  per  cent.,  in  the  other  eleven 
per  cent.  This  difference  resulted  by  accident,  as  the  writer  has  been  in- 
formed, from  the  need  of  complying  technically  with  certain  parliamentary 
rules  of  the  House.  It  is  hardly  necessary  to  say  that  this  mixture  of  specific 
and  ad-valorem  duties  on  wool  has  no  connection  with  the  compensating 
system.  The  compensating  scheme  accounts  only  for  the  two  kinds  of 
duties  on  woollen  goods. 


HOW  DUTIES  WERE  RAISED.  2O3 

1867,  has  been  on  the  average  more  than  fifty  per  cent,  on 
the  value  abroad. 

The  duty  on  wool  being  fixed  in  this  way,  that 
on  woollens  was  arranged  on  the  following  The  duty  on 
plan.  It  was  calculated  that  four  pounds  woollen 
of  wool  (unwashed)  were  needed  to  produce 
a  pound  of  cloth.  The  duty  on  wool,  as  has  been  ex- 
plained, amounted  to  about  eleven  and  one  half  cents 
a  pound,  taking  the  specific  and  ad-valorem  duty  to- 
gether. Each  of  the  four  pounds  of  wool  used  in  mak- 
ing a  pound  of  cloth,  paid,  if  imported,  a  duty  of  four  times 
eleven  and  one  half  cents,  or  forty-six  cents.  If  home 
grown  wool  was  used,  the  price  of  this,  it  was  assumed, 
was  equally  raised  by  the  duty.  The  manufacturer  in 
either  case  paid,  for  the  wool  used  in  making  a  pound  of 
cloth,  forty-six  cents  more  than  his  foreign  competitor. 
For  this  disadvantage  he  must  be  compensated.  More- 
over, the  manufacturer  in  the  United  States,  in  1867,  paid 
duties  on  drugs,  dye-stuffs,  oils,  etc.,  estimated  to  amount 
to  two  and  one  half  cents  per  pound  of  cloth.  For  this 
also  he  must  be  compensated.  In  addition  he  must  have 
interest  on  the  duties  advanced  by  him  ;  for  between  the 
time  when  he  paid  the  duties  on  the  wool  and  other 
materials,  and  the  time  when  he  was  reimbursed  by  the 
sale  of  his  cloth,  he  had  so  much  money  locked  up.  Add 
interest  for,  say  six  months,  and  we  get  the  final  total  of 
the  duty  necessary  to  compensate  the  manufacturer  for 
what  he  has  to  pay  on  his  raw  materials.  The  account 
stands : 


204  HISTORY  OF  THE  EXISTING  TARIFF. 

Duty  on  4  pounds  of  wool  at  n|  cents     ...         46    cents 

"      "  oils,  dye-stuffs,  etc 3i     " 

Interest 4i     " 

Total 53 

Congress  did  not  accept  the  exact  figure  set  by  the 
woollen  makers.  It  made  the  compensating  duty  fifty 
cents  per  pound  of  cloth  instead  of  fifty-three ;  but  this 
change  was  evidently  of  no  material  importance.  The 
woollen  manufacturers  got  substantially  all  that  they 
wanted.  It  will  be  remembered  that  in  1864  the  com- 
pensating specific  duty  on  cloth  had  been  only  twenty- 
four  cents  per  pound. 

The  ad-valorem  duty  was  fixed  at  thirty-five  per  cent. 
The  woollen  manufacturers  said  they  wanted  a  "  net  effec- 
tive protection  "  of  only  twenty-five  per  cent.1  This  does 
not  seem  immoderate.  But  ten  per  cent  ad-valorem  was 
supposed  to  be  necessary  to  compensate  for  the  internal 
taxes,  which  were  still  imposed  in  1867,  though  abolished 
very  soon  after.  This  ten  per  cent.,  added  to  the  desired 
protection  of  twenty-five  per  cent,  brought  the  ad-valorem 

1  "  All  manufactures  composed  wholly  or  in  part  of  wool  or  worsted  shall 
be  subjected  to  a  duty  which  shall  be  equal  to  twenty-five  per  cent,  net  ; 
that  is,  twenty-five  per  cent,  after  reimbursing  the  amount  paid  on  account 
of  wool,  dye-stuffs,  and  other  imported  materials,  and  also  the  amount  paid 
for  the  internal  revenue  tax  imposed  on  manufactures  and  on  the  supplies 
and  materials  used  therefor."  Joint  Report  of  Wool  Manufacturers  and  Wool 
Growers,  "Revenue  Report,  for  1866,"  p.  430 ;  also  in  "Transactions." 
The  Executive  Committee  of  the  Wool  Manufacturers'  Association  said,  in 
1866:  "Independently  of  considerations  demanding  a  duty  on  wool,  the 
wool  manufacturers  would  prefer  the  total  abolition  of  specific  duties,  pro- 
vided they  could  have  all  their  raw  material  free,  and  an  actual  net  protec- 
tion of  tvrenty.five  percent."  Harris,  "  Memorial,"  p.  9. 


HOW  DUTIES  WERE  RAISED.  26$ 

rate  to  thirty-five  per  cent.  The  final  duty  on  woollen 
cloth  was  therefore  fifty  cents  per  pound  and  thirty-five 
per  cent,  ad  valorem :  of  which  /the  fifty  cents  was  com- 
pensation for  duties  on  raw  materials  ;  ten  per  cent,  was 
compensation  for  internal  tax ;  and  of  the  whole  accumu- 
lated mass  only  twenty-five  per  cent,  was  supposed  to  give 
protection  to  the  manufacturer. 

This  duty  was  levied  on  woollen  cloths,  woollen  shawls, 
and  manufactures  of  wool  not  otherwise  provided  for— 
which  included  most  of  the  woollen  goods  then  made 
in  this  country.  On  other  classes  of  goods  the  same  sys- 
tem was  followed.  An  ad-valorem  duty  of  Duty 
thirty-five  per  cent,  was  imposed  in  all  cases ;  on  flannels« 

carpets, 

twenty-five  per  cent,  being  intended  to  be  dress  goods, 
protection,  and  ten  per  cent,  compensation  for  etc- 
internal  taxes.  The  specific  duty  varied  with  different 
goods,  but  in  all  cases  was  supposed  merely  to  offset 
the  import  duties  on  wool  and  other  supplies.  For  in- 
stance, on  flannels,  blankets,  and  similar  goods,  the  spe- 
cific duty  varied  from  fifty  cents  a  pound  to  twenty  cents, 
being  made  to  decrease  on  the  cheaper  qualities  of  goods, 
as  less  wool,  or  cheaper  wool,  was  used  in  making  a  pound 
of  flannel  or  blanket.  The  duties  on  knit  goods  were  the 
same  as  those  on  blankets.  On  carpets  the  system  was 
applied  with  some  modification.  The  specific  duty  was 
levied  here  by  the  square  yard,  and  not  by  the  pound. 
A  calculation  was  made  of  the  quantity  of  wool,  linen, 
yarn,  dye-stuffs,  and  other  imported  articles  used  for  each 


206  HISTORY  OF  THE  EXISTING  TARIFF. 

yard  of  carpet ;  the  total  duties  paid  on  these  materials, 
with  interest  added  as  in  the  case  of  cloth,  gave  the  com- 
pensating duty  per  yard  of  carpet.  On  this  basis,  for  in- 
stance, the  specific  duty  on  Brussels  carpets  was  made 
forty-four  cents  per  yard  (the  manufacturers  had  asked  for 
a  duty  of  forty-eight  cents) ;  the  ad-valorem  duty  of 
thirty-five  per  cent,  being  of  course  also  imposed.  In  the 
same  way  the  specific  duty  on  dress  goods  for  women's 
and  children's  wear  was  made  from  six  to  eight  cents  per 
yard,  according  to  quality.  It  is  evident  that  the  task  of 
making  the  specific  duty  exactly  compensate  for  the  duties 
on  wool  was  most  complicated  in  these  cases,  and  that 
any  excess  of  compensation  would  here  be  most  difficult 
of  discovery  for  those  not  very  familiar  with  the  details  of 
the  manufacture.  As  a  matter  of  fact,  it  is  precisely  in 
these  schedules  of  the  woollens  act  that,  as  we  shall  see, 
the  "  compensating  "  system  was  used  as  a  means  of  secur- 
ing a  high  degree  of  protection  for  the  manufacturer. 

These  duties,  ad  valorem  and  specific  taken  together, 
have  been  from  fifty  to  one  hundred  per  cent.,  and  even 
more,  on  the  cost  of  the  goods.  On  cloths  generally  they 
have  been  from  sixty  to  seventy  per  cent,  on  the  value. 
On  blankets  and  flannels  they  have  been  from  eighty  to 
one  hundred  per  cent.,  and  have  been  entirely  prohibitory 
of  importation.  On  dress  goods  they  have  been  from 
sixty  to  seventy  per  cent.  ;  on  Brussels  carpets  again 
from  sixty  to  seventy  per  cent.  ;  and  on  ingrain  carpets 
from  fifty  to  fifty-five  per  cent.  Yet  a  net  protection  of 


HOW  DUTIES  WERE  RAISED.  2O/ 

twenty-five  per  cent,  is  all  that  the  manufacturers  asked 
for  and  were  intended  to  have ;  and  the  question  naturally 
presents  itself,  did  they  not  in  fact^et  more  than  twenty- 
five  per  cent.  ? 

The  first  conclusion  that  can  be  drawn  from  this  expla- 
nation of  the  woollens  duties  is  that  there  was  at  all 
events  no  good  reason  for  the  permanent  retention  of  the 
ad-valorem  rate  of  thirty-five  per  cent.  Of 

Comment 

that  rate  ten  per  cent,  was  in  all  cases  meant       on  the 
to  compensate  for  the  internal  taxes.     These  ad-valorem 
disappeared    entirely    within    a   year    or    two 
after  the  woollens  act  was  passed.      Yet  the  ad-valorem 
rate  on  woollens  remained  at  thirty-five  per  cent,  without 
change  from  1867  to  1883.     Moreover,  as  the  course  of 
the  narrative  will  show,  it  was  steadily  raised  in  later 
years,  from  1883  to  1897,  until  in  the  act  of  1897  it  be- 
came as  high  as  fifty-five  per  cent.     There  is  no  more 
striking  illustration  of  the  way  in  which  duties  which  were 
imposed  in  order  to  offset  the  internal  taxes  of  the  war 
period,  have  been  retained  and  have  become  permanent 
parts  of  our  tariff  system,  although  the  original  excuse 
for  their  imposition  has  entirely  ceased  to  exist. 

It  may  seem  that  the  retention  of  the  specific  duties 
on  woollens  was  justified,    since    the    duties  comment  on 
on   wool  were   not  changed.     It   is   true  that  the  specific 
the  duties  on   dye-stuffs,  drugs,  and    such  ar- 
ticles   have    been    abolished    or    greatly    reduced    since 
1867;  but  these  played  no  great  part  in  the  determina- 


208  HISTORY  OF  THE  EXISTING  TARIFF. 

tion  of  the  specific  duty.  The  duties  on  wool  were 
not  changed  till  the  passage  of  the  act  of  1883.  There 
are,  however,  other  grounds  for  criticising  the  specific 
duties  on  woollens,  which  have  been  in  fact  not  merely 
compensating,  but  have  added,  in  most  cases,  a  consider- 
able degree  of  protection  to  the  "  net  "  twenty-five  per 
cent,  which  the  act  of  1867  was  supposed  to  give  the 
manfacturers. 

The  compensating  duties,  as  we  have  seen,  were  based 
on  two  assumptions :  first,  that  the  price  of  wool,  whether 
foreign  or  domestic,  was  increased  by  the  full  extent  of 
the  duty  ;  second,  that  four  pounds  of  wool  were  used  in 
making  a  pound  of  cloth.  The  first  assumption,  however, 
holds  good  only  to  a  very  limited  extent.  A  protective 
duty  does  not  necessarily  cause  the  price  of  the  protected 
article  to  rise  by  the  full  extent  of  the  duty.  It  may  be 
prohibitory;  the  importation  of  the  foreign  article  may 
entirely  cease ;  and  the  domestic  article,  while  its  price  is 
raised  to  some  extent,  may  yet  be  dearer  by  an  amount  less 
than  the  duty.  This  is  what  has  happened  with  regard  to 
most  grades  of  wool.  The  commoner  grades  of  wool  are 
raised  in  this  country  with  comparative  ease.  The  duty 
on  them  is  prohibitory,  and  their  importation  has  ceased. 
Their  price,  though  higher  than  that  of  similar  wools 
abroad,  is  not  higher  by  the  full  extent  of  the  duty.  It  is 
true  that  the  importation  of  finer  grades  of  clothing  and 
combing  wools  continues  ;  and  it  is  possible  that  the  wools 
of  Ohio,  Michigan,  and  other  States  east  of  the  Mississippi 


HOW  DUTIES  WERE  RAISED.  2OO, 

are  higher  in  price,  by  the  full  amount  of  the  duty,  than 
similar  wools  abroad.  Even  this  is  not  certain  ;  for  the 
wools  which  continue  to  be  imported  are  not  of  precisely 
the  same  class  as  the  Ohio  and  Michigan  wools.  As  a 
rule,  the  importations  are  for  exceptional  and  peculiar  pur- 
poses, and  do  not  replace  or  compete  with  domestic  wools 
At  all  events,  it  is  certain  that  the  great  mass  of  wools 
grown  in  this  country  are  entirely  shielded  from  foreign 
competition.  Their  price  is  raised  above  the  foreign 
price  of  similar  material ;  but  raised  only  by  some  amount 
less  than  the  duty.  The  manufacturer,  however,  gets  a 
compensating  duty  in  all  cases  as  if  his  material  were 
dearer,  by  the  full  extent  of  the  duty,  than  that  of  his 
foreign  competitor.  The  bulk  of  the  wool  used  by  Ameri- 
can manufacturers  does  not  show  the  full  effect  of  the 
tariff,  and  the  manufacturers  clearly  obtain,  in  the  specific 
duty,  more  compensation  than  the  higher  price  of  their 
wool  calls  for.  The  result  is  that  this  duty,  instead  of 
merely  preventing  the  domestic  producer  from  being  put 
at  a  disadvantage,  yields  him  in  most  cases  a  considerable 
degree  of  protection,  over  and  above  that  given  by  the 
ad-valorem  duty.1 

There  is  another  way  in  which  the  compensating  duty 
is  excessive.  A  very  large  quantity  of  woollen  goods  are 

1  See  the  instructive  remarks  of  Mr.  John  L.  Hayes,  in  Bulletin  Wool 
Manufacturers  vol.  xiii.  pp.  98-108.  Cf.  "Tariff  Comm.  Report,"  pp. 
1782-1785.  The  production  and  importation  of  wool  in  different  parts  of 
the  country  for  a  series  of  years  are  given  in  some  detail  in  "  Tariff 
Comm.  Report,"  pp.  2435,  2436. 


210  HISTORY  OF  THE  EXISTING  TARIFF. 

not  made  entirely  of  wool.  Cotton,  shoddy,  and  other 
substitutes  are  in  no  inconsiderable  part  the  materials  of 
the  clothes  worn  by  the  mass  of  the  people.  In  these 
goods  very  much  less  than  four  pounds  of  wool  is  used  in 
making  a  pound  of  cloth,  and  the  specific  duty  again 
yields  to  the  manufacturer  a  large  degree  of  protection. 

The  second  assumption  of  the  compensating  system, 
that  four  pounds  of  wool  are  used  in  making  a  pound  of 
cloth,  is  also  open  to  criticism.  The  goods  in  which 
cotton  and  shoddy  are  used  clearly  do  not  require  so 
much  wool.  But  it  is  probable  that  even  with  goods 
made  entirely  of  wool,  the  calculation  of  four  pounds  of 
unwashed  wool  for  each  pound  of  cloth  is  very  liberal. 
Wool,  unwashed,  shrinks  very  much  in  the  cleaning  and 
scouring  which  it  must  receive  before  it  is  fit  for  use  ; 
and  the  loss  by  wear  and  waste  in  the  processes  of  manu- 
facture is  also  considerable.  The  shrinkage  in  scouring  is 
subject  to  no  definite  rule.  In  some  cases  wool  loses  only 
forty  per  cent,  of  its  weight  in  the  process,  in  others  as 
much  as  seventy-five  per  cent.  The  shrinkage  in  scouring 
on  American  wools  is  rarely  more  than  sixty  per  cent ; 
and  if  to  this  is  added  a  further  loss  of  twenty-five  per 
cent,  in  manufacture,  there  will  be  needed  for  a  pound  oi 
cloth  no  more  than  three  and  one  third  pounds  of  wool.1 

1  See,  as  to  the  loss  of  wool  in  scouring,  Quarterly  Report  Bureau  of  Sta- 
tistics, for  quarter  ending  June  30,  1884,  pp.  563-565  ;  Harris,  "  Memorial," 
p.  1 1  ;  Schoenhof ,  ' '  Wool  and  Woollens, "  p.  10  ;  Bulletin  WoolMf. ,  vol.  xiii. , 
p.  8.  The  least  loss  I  have  found  mentioned  is  twenty-five  per  cent,  (coarse 
Ohio),  and  the  highest  seventy  per  cent.  (Buenos  Ayres  wool).  Ordinary 


HOW  DUTIES  WERE  RAISED.  211 

With  the  great  majority  of  goods  made  in  this  country, 
the  shrinkage  and  the  loss  in  manufacture  do  not  amount 
to  more  than  this.  The  calculation  of  four  for  one  is  for 
most  American  goods  a  liberal  one  ;  and  it  is  evident  that 
the  compensating  duty,  based  on  this  liberal  calculation, 
yields  a  degree  of  protection  in  the  same  way  that  it  does 
on  goods  that  contain  cotton  or  shoddy.  On  the  other 
hand,  there  are  some  grades  of  imported  wool  on  which 
the  shrinkage  and  loss  in  manufacture  are  so  great  that 
the  compensating  duty  is  not  excessive.  Some  grades  of 
Australian  wool,  which  are  imported  for  manufacturing 
fine  goods  and  worsteds,  are  subject  to  exceptional 
shrinkage  and  to  exceptional  waste  in  the  process  of 
manufacture.  Of  this  class  of  wool  four  pounds,  and 
sometimes  a  little  more,  are  apt  to  be  used  for  a  pound 
of  cloth.1  In  such  cases  the  compensating  duty  evidently 

American  wool  loses  between  fifty  and  sixty  per  cent,  in  scouring.  The  loss 
in  weight  in  manufacturing  varies  much  with  the  processes,  but  with  care 
will  not  exceed  twenty-five  per  cent.  With  most  goods  it  is  less. 

If  the  loss  in  scouring  100  Ibs.  of  wool  is  sixty  per 

cent.,  there  remain      .....         40  Ibs.  scoured  wool 

Deduct  twenty-five  per  cent,  for  loss  in  manufacture  10  Ibs. 

Leaves  .         .30  Ibs.  of  cloth, 

or  i  Ib.  of  cloth  for  3^  Ibs.  of  wool. 

If  the  loss  in  scouring  100  Ibs.  of  wool  is  sixty-five 

per  cent,  there  remain          ....         35  Ibs.  scoured  wool. 
Deduct  twenty-five  per  cent,  for  loss  in  manufacture 

Sflbs. 

Leaves  .         .         .         26^  Ibs.  of  cloth, 
or  I  Ib.  cloth  for  not  quite  4  Ibs.  of  wool. 

1  See  the  instances  given  by  Mr.  Hayes  in  Wool  Manufacturers'  Bulletin, 
vol.  xii.,  pp.  4-9.  These  all  refer  to  Australian  wool,  which,  as  Mr.  Hayes 
says  elsewhere  (ibid.,  p.  107),  is  imported  in  comparatively  small  quantities 
for  exceptional  purposes. 


212  HISTORY  OF  THE  EXISTING  TARIFF. 

may  fail  to  counterbalance  entirely  the  disadvantage 
under  which  the  manufacturer  labors  in  the  higher  price 
of  his  raw  material ;  for  the  wool,  being  imported  into 
this  country,  and  paying  the  duty,  must  be  higher  in  price 
by  the  full  amount  of  the  duty  than  the  same  wool  used 
by  the  foreign  producer.  In  other  words,  there  are  cases 
where  the  specific  duty  is  not  sufficient  to  offset  the  duty 
on  the  raw  material.  It  is  probable  that  this  fact  ex- 
plains, in  part  at  least,  the  regular  importation  of  certain 
dress  goods  and  finer  grades  of  cloths,  which  continue  to 
come  into  the  country  from  abroad  in  face  of  the  very 
heavy  duty.  But  such  cases  are  exceptional.  For  most 
goods  made  in  the  United  States  the  compensating  duty 
on  the  four  to  one  basis  is  excessive. 

One  other  provision  in  the  act  of  1867  may  be  pointed 
out,  which  bears  on  the  calculation  of  four  pounds  of  wool 
to  one  pound  of  cloth,  and  at  the  same  time  illustrates 
the  spirit  in  which  the  act  was  prepared.  It  has  already 
been  said  that  the  duty  on  wool  is  laid  on  unwashed  wool ; 
and  the  compensating  duty  is  fixed  on  the  calculation 
that  it  requires  four  pounds  of  unwashed  wool  to  make  a 
pound  of  cloth.  The  act  of  1867  provided  that  clothing 
wool,  if  washed,  should  pay  double  duty,  and  if  scoured, 
treble  duty.  Similarly  combing  wool  and  carpet  wool 
were  made  to  pay  treble  duty  if  scoured.  But  no  provi- 
sion whatever  was  made  as  to  combing  and  carpet  wools 
if  washed ;  they  were  admitted  at  the  same  rate  of  duty 
whether  washed  or  unwashed.  This  amounted  practically 


HOW  DUTIES    WERE  RAISED.  21$ 

to  lowering  the  duty  on  them.  The  provision  was  of  no 
small  importance  in  the  case  of  combing  wools ;  for  these 
always  come  to  market  in  the  washed  condition,  and 
would  have  been  regularly  subject  to  double  duty  if 
treated  as  clothing  wool  was.  It  was  alleged  in  justifica- 
tion of  their  more  liberal  treatment  that  a  double  duty 
on  them  would  have  been  virtually  prohibitory.  Very 
likely  this  was  the  case;  and,  regarded  by  itself,  the 
arrangement  made  in  the  act  of  1867  (and  retained  in  all 
later  acts  to  1897)  was  reasonable.  But  in  its  train  one 
would  have  expected  a  corresponding  moderation  of  the 
compensatory  duties  on  the  goods  for  which  combing  wool 
was  used.  No  such  reduction,  however,  was  made ;  the 
full  compensating  duty  was  imposed ;  and  the  ad-valorem 
duty,  consequently,  was  far  from  indicating  the  real  de- 
gree of  protection  afforded.  As  it  happened,  for  several 
years  after  the  act  was  passed,  a  turn  in  fashion  brought 
worsted  goods,  made  with  combing  wool,  into  great  de- 
mand; and  during  these  years  certain  manufacturers  of 
such  goods  found  their  business  exceedingly  profitable.1 
If  the  compensating  duty  was  thus  liberal  in  the 
case  of  most  woollen  goods,  and  more  than  liberal  in 

1  Under  the  reciprocity  treaty  with  Canada  (1854-1866)  wool  from  that 
country  had  been  admitted  free,  and  considerable  quantities  of  combing 
wool  had  been  imported.  The  loss  of  this  opportunity  was  one  ground  why 
the  manufacturers  in  1867  were  desirous  of  securing  washed  wool  of  this 
kind  without  double  duty.  In  1867-72,  there  were  very  heavy  imports  of 
combing  wool,  partly  from  Canada,  mainly  from  England.  In  later  years, 
the  imports  of  wool  of  this  class  have  been  small,  and  the  proviso  here  under 
discussion  has  been  of  minor  consequence.  Though  opposed  by  the  wool- 
growers,  the  admission  of  washed  combing  wool  at  the  same  rate  as  un- 
washed was  maintained  in  all  the  tariff  acts  from  1867  to  1897. 


214  HISTORY   OF  THE  EXISTING  TARIFF. 

the  case  of  worsteds,  it  was  to  be  expected  that  other 
schedules  where  a  check  was  more  difficult  to  apply, 
would  also  contain  excessive  compensation.  The  specific 
duty  on  carpets  was  levied  by  the  yard ;  that  on  Brus- 
sels carpets,  for  instance,  was  forty-four  cents  a  square 
yard.  Similarly  the  specific  duty  on  dress-goods  was 
levied  by  the  square  yard.  That  on  blankets,  flannels, 
worsteds,  yarns,  etc.,  was  fixed  by  the  pound,  but  was 
made  to  vary  from  twenty  to  fifty  cents  a  pound,  accord- 
ing to  the  value  of  the  goods.  The  last-mentioned  goods, 
for  instance,  paid  a  duty  of  twenty  cents  a  pound  if  worth 
forty  cents  or  less  a  pound ;  a  duty  of  thirty  cents  if 
worth  between  forty  and  sixty  cents  ;  and  so  on.  In 
every  case,  of  course,  the  ad-valorem  (nominally  protective) 
rate  of  thirty-five  per  cent,  was  added  to  the  specific 
duties.  It  is  evidently  a  very  complex  problem  whether 
these  "compensating"  duties  represent  the  exact  sum 
necessary  to  offset  the  increased  price  of  materials  due  to 
the  tariff  rates  on  wool,  hemp,  dye-stuffs,  and  other 
dutiable  articles  used  by  manufacturers.  We  have  seen 
that  the  movement  that  resulted  in  the  passage  of  the  act 
of  1867  was  brought  about  chiefly  by  the  manufacturers 
of  carpets  and  worsteds.  These  men  adjusted  the  specific 
duties,  and  alone  could  know  with  how  great  accuracy 
they  attained  their  object  of  compensation.  In  some  in- 
stances it  was  confessed  that  there  was  more  than  com- 
pensation in  their  scheme ;  this  was  admitted  to  be  the 
case  with  blankets  and  dress-goods.  On  all  goods  it  is 


HOW  DUTIES  WERE  RAISED.  21$ 

not  to  be  doubted  that  a  liberal  allowance  was  made  in 
favor  of  the  manufacturers,  and  that  the  specific  rates 
gave  them  a  certain  amount,  sometimes  a  great  amount, 
of  pure  and  simple  protection. 

The  truth  is  that  the  wool  and  woollens  schedule,  as 
it  was  framed  in  the  act  of  1867,  and  as  it  remained  in 
the  successive  modifications  of  later  tariff  acts,  was  in 
many  ways  a  sham.  Nominally  it  limited  the  protection 
for  the  manufacturer  to  a  clearly  defined  point,  indicated 
by  the  ad-valorem  rate.  As  a  matter  of  fact,  no  one 
could  tell  how  much  of  the  different  duties  was  protec- 
tive, and  how  much  merely  compensating.  So  compli- 
cated was  the  schedule,  and  so  varying  were  the  conditions 
of  trade  and  manufacture,  that  the  domestic  manufacturer 
himself  found  it  difficult  to  say  exactly  how  great  a  de- 
gree of  encouragement  the  government  gave  him.  In 
some  cases  the  effectual  protection  might  be  less  than  the 
twenty-five  (or  thirty-five)  per  cent,  which  the  tariff  was 
supposed  to  yield.  In  the  great  majority  of  cases  it  was 
very  much  more  than  this,  and  was  meant  to  be  more. 
The  whole  cumbrous  and  intricate  system — of  ad-valorem 
and  specific  duties,  of  duties  varying  according  to  the 
weight  and  the  value  and  the  square  yard — was  adopted 
largely  because  it  concealed  the  degree  of  protection 
which  in  fact  the  act  of  1867  gave.  Duties  that  plainly 
levied  taxes  of  60,  80,  and  100  per  cent,  would  hardly 
have  been  suffered  by  public  opinion  or  enacted  by  the 
legislature.  Probably  few  members  of  Congress  under- 


2l6  HISTORY  OF   THE  EXISTING    TARIFF. 

stood  the  real  nature  and  bearing  of  the  scheme ;  and 
no  attempt  was  made  to  check  the  calculations  of  the 
woollen  manufacturers,  or  to  see  whether,  intentionally 
or  by  accident,  abuses  might  not  have  crept  into  their 
proposals. 

The   most    remarkable    fact    in    the    history   of    this 
piece  of   legislation  was  its   failure   to  secure 

Manu- 
facturers not  the  object  which  its  supporters  had   in  mind. 

benefited     Notwithstanding    the    very    great    depree    of 

by  the  act. 

protection  which  the  manufacturers  got,  the 
production  of  woollen  goods  proved  to  be  one  of  the 
most  unsatisfactory  and  unprofitable  of  manufacturing 
occupations.  As  a  rule,  a  strong  protective  measure 
causes  domestic  producers  to  obtain,  at  least  for  a  time, 
high  profits ;  though  under  the  ordinary  circumstances  of 
free  competition,  profits  are  sooner  or  later  brought  down 
to  the  normal  level.  But  in  the  woollen  manufacture  even 
this  temporary  gain  was  not  secured  by  the  home  producers 
after  the  act  of  1867.  A  few  branches,  such  as  the  pro- 
duction of  carpets,  of  blankets,  of  certain  worsted  goods, 
were  highly  profitable  for  some  years.  These  were  the 
branches,  it  will  be  remembered,  in  which  the  compensa- 
ting duties  were  most  excessive,  and  the  prominent  manu- 
facturers engaged  in  them  had  done  most  to  secure  the 
passage  of  the  act  of  1867.  Profits  in  these  branches 
were  in  course  of  time  brought  down  to  the  usual  level, 
and  in  many  instances  below  the  usual  level,  by  the  in- 
crease of  domestic  production  and  domestic  competition. 


HOW  DUTIES    WERE  RAISED.  21  / 

The  manufacture  of  the  great  mass  of  woollen  goods, 
however,  was  depressed  and  unprofitable  during  the  years 
immediately  following  the  act,  notwithstanding  t^e  specu- 
lative activity  and  seeming  prosperity  of  that  time.1  It 
has  sometimes  been  said  that  this  was  the  effect  of  the 
act  itself ;  but  other  causes,  such  as  the  cessation  of  the 
the  war  demand  and  the  increasing  use  of  worsted  goods 
in  place  of  woollen  goods,  probably  suffice  to  account  for 
the  unprosperous  state  of  affairs.  It  has  also  been  said 
that  the  lack  of  diversity  in  the  woollen  manufacture  of 
the  United  States  can  be  traced  to  those  provisions  in 
the  act  of  1867  by  which  particularly  high  protection  was 
given  on  the  common  and  cheaper  goods  ;  the  more  so 
since  the  high  duty  on  wool  has  tended  to  hamper  the 
manufacturer  in  the  choice  of  his  material.  No  doubt  it 
is  true  that  at  present  the  majority  of  finer  woollen  goods 
are  imported,  and  the  manufacture  in  this  country  is 
confined  mainly  to  cheaper  grades.  The  situation  is  not 
essentially  different  from  that  which  we  have  already 
described  as  existing  before  i86o.8  But  here  again  too 
much  is  ascribed,  for  good  or  evil,  to  the  tariff.  The 

1  See  an  instructive  article,  by  a  manufacturer,  in  "  Bulletin  Nat.  Assoc. 
Wool  Mf.,"  vol.  III.,  p.  354  (1872).  '*  There  is  one  thing  that  all  who  are 
interested  in  the  manufacture  will  agree  to,  that  for  the  last  five  years  [from 
1867  to  1872)  the  business  in  the  aggregate  has  been  depressed,  that  the 
profits  made  during  the  war  have  been  exhausted  mainly,  and  that  it  has 
been  extremely  difficult  during  all  this  time  to  buy  wool  and  mannfacture  it 
into  goods  and  get  a  new  dollar  for  an  old  one." — Cf.  Mr.  Harris*  pamph- 
lets, cited  above. 

8  See  above,  p.  147. 


2l8  HISTORY  OF   THE  EXISTING   TARIFF. 

limited  range  of  the  woollen  manufacturer  is  probably 
due  to  deeper  causes  ;  in  part  to  the  adaptability  of  the 
domestic  wool  for  making  the  woollen  goods  which  form 
the  staples  of  the  American  manufacture,  in  part  to  the 
fact  that  the  methods  and  machinery  for  those  goods  are 
fitted  to  our  economic  conditions.  The  causes,  in  fact, 
are  probably  analogous  to  those  which  have  confined  the 
cotton  manufacture  within  a  limited  range.  But,  on  the 
other  hand,  it  is  clear  that  the  act  of  1867  has  not  been 
successful  as  a  protective  measure  ;  it  has  not  stimulated 
the  woollen  industry  to  any  noticeable  degree,  nor  has  it 
greatly  affected  the  character  or  extent  of  the  imports. 
So  far  as  the  wool-growers  are  concerned,  it  has  not  pre- 
vented the  price  of  wool  from  declining  in  the  United 
States,  in  sympathy  with  the  decline  elsewhere  ;  nor  has 
it  prevented  the  shifting  of  wool-growing  from  the  heart 
of  the  country  to  the  western  plains,  where  wool  is  raised 
under  conditions  like  those  of  Australia  and  the  Argen- 
tine Republic.  The  manufacture  probably  would  have 
been,  on  the  whole  and  in  the  long  run,  more  satisfactory 
to  those  engaged  in  it  if  they  had  had  free  wool  and  if 
woollens  had  been  charged  with  no  more  than  the  pro- 
tection of  25  per  cent,  which  the  act  of  1867  was  supposed 
to  give.1  Some  establishments,  no  doubt,  have  arisen 
which  could  not  continue  under  such  a  system,  and  for 
these  temporary  provisions  should  be  made  if  the  present 
duties  are  swept  away. 

1  There  is  a  voluminous  literature  on  the  wool  and  woollens  duties.     The 
original  scheme  was  discussed  in  Mr.   Wells's  "Report  for  1866-67,"  pp. 


HOW  DUTIES  WERE  RAISED.  2iq 

The  woollens  act  of  1867  has  been  discussed  somewhat 
at  length  because  it  is  the  most  striking  illustration  of  the 
manner  in  which  protective  duties  were  advanced  after 
the  war  at  the  request  of  domestic  producers.  There  are 
not  a  few  other  cases  in  which  an  increase  of  duties 
beyond  the  level  reached  during  the  war  was  made. 
After  the  woollens  act,  perhaps  the  most  remarkable  is  the 
copper  act  of  1869.  Before  that  year  the  duty  Copperact 
on  copper  ore  had  been  five  per  cent.,  that  of  1869. 
on  copper  in  bars  and  ingots  had  been  two  and  a  half 
cents  per  pound.  Under  the  very  low  duty  on  copper 
ore  a  large  industry  had  grown  up  in  Boston  and  Balti- 
more. Ore  was  imported  from  Chili,  and  was  smelted 
and  refined  in  these  cities.  But  during  the  years  im- 
mediately preceding  1869  the  great  copper  mines  of 
Lake  Superior  had  begun  to  be  worked  on  a  consider- 
able scale.  These  mines  are  among  the  richest  sources 
of  copper  in  the  world,  and  under  normal  circum- 

50,  60.  Further  attacks  on  the  scheme  will  be  found  in  Mr.  Wells's  "  Re-. 
part  for  1869-70,"  pp.  xcii-cv  ;  Wells,  "Wool  and  the  Tariff"  (1873); 
Harris,  "  Memorial  to  Committee  on  Ways  and  Means  "(1872);  Schoen- 
hof,  '•  Wool  and  Woollens  "  (1883).  On  the  other  side  a  steady  advocacy  of 
the  compound  system  will  be  found  in  the  Bulletin  of  the  Association  of 
Wool  Manufacturers,  to  which  reference  will  be  frequently  made  in  the; 
following  pages.  Mr.  Wells's  remarks  in  1870  are  criticised  in  the  Bulle- 
tin, vol.  ii.,  pp.  19-34  ;  the  changes  made  in  the  compound  system  in  1883 
are  defended  in  vol.  xiii.,  pp.  1-13,  89-128  ;  and  the  changes  of  1890,  in 
vol.  xx.  Compare  also  the  ' '  Examination  of  the  Statements  in  the  Report 
of  the  Revenue  Commissioner,"  House  Rep.,  4istCong.,  2d  session,  Report 
No.  72  ;  the  "Tariff  Commission  Report  of  1882,"  pp.  2240-2247,  2411- 
2440 ;  and  the  references  given  on  p.  296,  note,  in  this  volume.  Statistics 
are  collected  in  the  Wool  Book  (1893),  published  by  the  Wool-Manufac- 
turers' Association,  and  in  the  volume  on  Wool  and  Manufactures  of  Wool 
(1894),  issued  by  the  Bureau  of  Statistics,  Tieasury  Department. 


220  HISTORY  OF  THE  EXISTING   TARIFF. 

stances  would  supply  the  United  States  with  this  metal 
more  cheaply  and  abundantly  than  any  other  country; 
yet  by  virtue  of  our  tariff  policy  these  very  mines 
caused  us  for  many  years  to  pay  more  for  our  copper 
than  any  other  country.  The  increased  production  from 
these  mines,  with  other  circumstances,  had  caused  copper 
to  fall  in  price  in  1867  and  1868;  and  their  owners  came 
before  Congress  and  asked  for  an  increase  of  duties.  Cop- 
per ore  was  to  pay  three  cents  for  each  pound  of  pure  cop- 
per, equal  to  twenty-five  or  thirty  per  cent.,  in  place  of  the 
previous  duty  of  five  per  cent. ;  and  ingot  copper  was  to 
pay  five  cents  per  pound,  instead  of  two  and  a  half  cents. 
The  bill  making  these  changes  was  passed  by  both  houses. 
President  Johnson  refused  to  sign  it,  and  sent  in  a  veto 
message,  which  bore  marks  of  having  been  composed  by 
other  hands  than  his  own.  But  the  President  was  then  per- 
haps the  most  unpopular  man  in  the  country ;  Congress 
had  got  a  habit  of  overriding  his  vetoes,  and  the  copper  bill 
was  passed  in  both  Houses  by  the  necessary  two-thirds 
vote,  and  became  law.1  The  effect  of  the  higher  duty 
was  to  accelerate  the  closing  of  the  smelting  establish- 

1  The  veto  message  is  in  Congress.  Record,  1868-69,  P-  I46°-  Jt  was 
written  by  Mr.  David  A.  Wells,  as  that  gentleman  has  informed  the  writer. 
The  character  of  the  bill  was  made  clear  enough  in  the  course  of  the  debate, 
at  well  as  by  the  veto  message.  See  Brooks's  speech,  ibid.,  p.  1462.  The 
manner  in  which  this  bill,  and  others  of  the  same  kind,  were  carried  through 
Congress  is  illustrated  by  some  almost  naive  remarks  of  Mr.  Frelinghuysen  : 
"  My  sympathies  are  with  this  bill,  as  they  always  are  for  any  tariff  bill.  I 
confess,  however,  that  I  do  not  like  this  system  of  legislation,  picking  out 
first  wool,  then  copper,  then  other  articles,  and  leaving  the  general  manu- 
facturing interests  without  that  protection  to  which  they  are  entitled,  and 
thus  dividing  the  strength  which  those  great  interests  ought  to  have.  Bv* 


HOW  DUTIES  WERE  RAISED.  221 

ments  which  had  treated  imported  ores,  and  to  aid  the 
domestic  producers  of  copper  in  pocketing  large  profits. 
The  displacement  of  the  importe<}  copper  by  the  Lake 
Superior  product  would  have  come  in  any  case ;  for,  as 
events  proved,  the  sources  of  supply  in  this  country  were 
rich  enough  not  only  to  oust  foreign  competitors  at  home, 
but  soon  to  invade  the  market  abroad.  With  the  aid  of 
the  duty,  the  mining  companies  were  able  to  form  a 
combination  which  fixed  the  price  of  copper  within  the 
country  at  a  higher  price  than  that  ruling  abroad.  When 
it  was  impossible  to  dispose  of  the  entire  product  within 
the  country,  large  quantities  were  sent  abroad  and  sold 
at  whatever  price  could  be  got, — lower  in  any  case  than 
the  domestic  price.  The  great  profits  secured  by  those 
who  were  shrewd  and  fortunate  in  developing  the  mines 
were  doubtless  due  in  the  main  to  the  unsurpassed  rich- 
ness of  the  copper  deposits.  But  they  were  increased  by 
the  copper  duty  of  1869;  and  thus  for  a  series  of  years 
the  great  natural  resources  of  the  country  became  a  cause 
not  of  abundance  and  cheapness,  but  of  curtailment  of 
supply  and  dearness.1 

Still  another  instance  of  the  increase  of  duties  since  the 
war  is  to  be  found  in  the  case  of  steel  rails.  Before  1870 
steel  rails  had  been  charged  with  duty  under  the  head  of 

still,  if  a  bill  is  introduced  which  gives  protection  to  copper,  trusting  to  the 
magnanimity  of  the  Representatives  from  the  West  who  have  wool  and  cop- 
per protected,  I  should  probably  vote  for  the  bill." — Ibid.,  p.  161. 

1  On  the  effect  of  the  copper  act,  see  Mr.  Wells's  Essay,  already  referred 
to,  in  the  Cobden  Club  series,  pp.  518-521  Cf.  the  "  Report  of  the  Tariff 
Comm  ,"  pp.  2554-2577.  See  also  Appendix,  V.,  where  the  total  pro- 
duction of  copper  in  each  year,  prices  at  home  and  abroad,  etc. ,  are  given. 


HISTORY  OF  THE  EXISTING  TARIFF. 

"manufacturers  of  steel  not  otherwise  provided  for,"  and 
Steel  rails,  as  such  had  paid  forty-five  per  cent.  The 
I87°-  tariff  act  of  1870  changed  this  to  a  specific 
duty  of  i|  cents  per  pound,  or  $28  per  gross  ton. 
At  the  time,  the  change  caused  an  increase,  but  no 
very  great  increase,  in  the  duty.  The  Bessemer  process 
of  making  steel  had  hardly  begun  to  be  used  in  1870, 
and  the  price  of  steel  rails  at  that  time  in  England 
was  about  $50  per  ton.  The  ad-valorem  rate  of  forty- 
five  per  cent.,  calculated  on  this  price,  would  make  the 
duty  $22.50  per  ton,  or  not  very  much  less  than  the  duty 
of  $28  per  ton  imposed  by  the  act  of  1870.  Between 
1870  and  1873,  the  price  of  steel  rails  advanced  in  Eng- 
land, and  the  specific  duty  of  $28  imposed  in  the  former 
year  was  not  higher  than  the  ad-valorem  rate  of  forty-five 
per  cent,  would  have  been.  But  after  1873  the  prices  of 
Bessemer  steel  and  of  steel  rails  steadily  went  down.  As 
they  did  so,  the  specific  duty  became .  heavier  in  propor- 
tion to  the  price.  By  1877  the  average  price  of  steel  rails 
in  England  was  only  a  little  over  $31  per  ton  ;  and  since 
1877  the  English  price  has  not  on  the  average  been  so 
high  as  $28  per  ton.  The  duty  of  $28,  which  this  country 
imposed,  therefore  became  equivalent  to  more  than  one 
hundred  per  cent  on  the  foreign  price.  The  result  of  this 
exorbitant  duty  was  an  enormous  gain  to  the  producers  of 
steel  rails  in  the  United  States.  The  patent  for  the  use  of 
the  Bessemer  process  was  owned  by  a  comparatively  small 
number  of  companies  ;  and  these  companies,  aided  by  a 


D'UTTES  WERE  RAISED.  22$ 

patent  at  home  and  protected  by  an  enormous  duty 
against  foreign  competitors,  were  enabled  for  a  time  to  ob- 
tain exceedingly  high  prices  for  steel  rails.  During  the 
great  demand  for  railroad  material's  which  began  on  the 
revival  of  business  in  1879,  and  continued  for  several 
years  thereafter,  the  prices  of  steel  rails  were  advanced  so 
high  that  English  rails  were  imported  into  this  country 
even  though  paying  the  duty  of  one  hundred  per  cent. 
During  this  time  the  price  in  England  was  on  the  average 
in  1880  about  $36  per  ton,  and  in  1881  about  $31  per  ton. 
In  this  country  during  the  same  years  the  price  averaged 
$67  and  $61  per  ton.  That  is,  consumers  in  this  country 
were  compelled  to  pay  twice  as  much  for  steel  rails  as 
they  paid  in  England.  Any  thing  which  increases  the 
cost  of  railroad-building  tends  to  increase  the  cost  of 
transportation ;  and  a  tax  of  this  kind  eventually  comes 
out  of  the  pockets  of  the  people  in  the  shape  of  higher 
railroad-charges  for  carrying  freight  and  passengers.  The 
domestic  producers  of  steel  rails  secured  enormous  profits, 
of  one  hundred  per  cent,  and  more  on  their  capital,  during 
these  years.  These  profits,  as  is  always  the  case,  caused 
a  great  extension  of  production.  The  men  who  had 
made  so  much  money  out  of  Bessemer  steel  in  1879-81 
put  this  money  very  largely  into  establishments  for 
making  more  steel.  New  works  were  erected  in  all  parts 
of  the  country.  At  the  same  time  the  demand  fell  off, 
in  consequence  of  the  check  to  railroad-building ;  and  the 
increased  supply,  joined  to  the  small  demand,  caused 


224  HISTORY  OF  THE  EXISTING  TARIFF. 

prices  here  to  fall  almost  to  the  English  rates.  But 
during  the  years  of  speculation  and  railroad-building  the 
tariff  had  yielded  great  gains  to  makers  of  steel  rails  ;  and 
popular  feeling  against  this  state  of  things  was  so  strong 
that  in  1883  Congress  felt  compelled,  as  we  shall  see,  to 
make  a  considerable  reduction  in  the  duty.1 

Still  another  case,  and  one  which  bears  some  resem- 
Marble  1864  klance  to  the  woollen  act  of  1867,  is  to  be 
and  1870.  found  in  the  change  of  the  duty  on  marble, 
which  was  made  in  1870.  The  duty  on  marble  had 
been  put  in  1864  at  fifty  cents  per  cubic  foot,  and 
twenty  per  cent,  in  addition.  This,  it  may  be  remarked, 
is  one  of  the  not  infrequent  cases  in  which  our  tariff 
has  imposed,  and  still  imposes,  both  ad-valorem  and 
specific  duties  on  the  same  article.  No  compensating 
principle,  such  as  is  found  in  the  woollen  schedule,  ex- 
plains most  of  these  mixed  duties ;  and  it  is  hard  to 
find  any  good  reason  for  retaining  them,  and  giving  the 
customs  authorities  the  task  of  assessing  the  duty  both 
on  value  of  the  article  and  on  its  weight  or  measure. 
The  cause  of  their  retention,  there  can  be  little  doubt,  is 
that  they  serve  to  conceal  the  real  extent  of  the  duties 
imposed.  The  duty  on  marble,  for  instance,  had  been 
thirty  per  cent,  in  1861,  and  had  been  raised  to  forty  per 

1  The  effect  of  the  steel-rail  duty  is  discussed  more  in  detail  in  Mr.  J. 
Schoenhof's  "  Destructive  Influence  of  the  Tariff,"  ch.  vii.  On  the  profits 
made  by  the  manufacturers,  see  Mr.  A.  S.  Hewitt's  speech  in  Congress, 
May,  16,  1882,  Congress.  Record,  pp.  3980-83  ;  also  printed  separately. 
Cf.  infra,  p.  94,  and  figures  of  production,  prices,  etc.  in  Appendix,  VI. 


HOW  DUTIES  WERE  RAISED.  22$ 

cent,  in  1862.  The  mixed  duty  put  on  in  1864  was 
equivalent  to  eighty  per  cent,  and  more.1  A  direct  in- 
crease of  the  duty  from  forty  to  eighty  per  cent,  would 
hardly  have  been  ventured  on  ;  but'  the  adoption  of  the 
mixed  duty  veiled  the  change  which  was  in  fact  made. 
One  would  have  supposed  that  this  rate  of  eighty  per 
cent,  would  have  sufficed  even  for  the  most  ardent  sup- 
porter of  home  industries;  but  in  1870  a  still  further 
increase  was  brought  about.  It  was  then  enacted  that 
marble  sawed  into  slabs  of  a  thickness  of  two  inches  or 
less  should  pay  twenty-five  cents  for  each  superficial 
square  foot,  and  thirty  per  cent,  in  addition  ;  slabs  be- 
tween two  and  three  inches  thick  should  pay  thirty-five 
cents  per  square  foot,  and  thirty  per  cent. ;  slabs  between 
three  and  four  inches  thick  should  pay  forty-five  cents 
per  square  foot,  and  thirty  per  cent.;  and  so  on  in  propor- 
tion. Marble  more  than  six  inches  thick  paid  at  the  old 
rate  of  fifty  cents  per  cubic  foot,  and  twenty  per  cent.  It 
is  evident  that  the  change  made  in  the  duty  on  marble  in 
slabs  caused  a  great  increase.  The  duty  on  the  thinnest 
slabs  (two  inches  or  less  in  thickness)  became  $1.50  per 
cubic  foot,  and  thirty  per  cent,  in  addition  ;  this  same 

1  The  duty  of  1864  was  fixed,  as  Mr.  Merrill  then  explained,  in  accord- 
ance with  an  arrangement  made  between  the  importing  merchants  and  "  the 
gentlemen  in  Washington  in  the  marble-quarry  interest."  The  latter  were 
Mr.  Merrill's  constituents.  It  did  not  seem  to  occur  to  that  gentleman  that 
the  persons  who  were  to  pay  for  the  marble  should  be  regarded  at  all. 
Originally  Mr.  Morrill  had  even  proposed  a  duty  of  seventy-five  cents  per 
cubic  yard,  with  twenty  per  cent,  in  addition.  See  Congr.  Globe,  1863-64, 
pp.  2746-2747. 


226  HISTORY  OF  THE  EXISTING   TARIFF. 

marble  had  hitherto  been  admitted  at  fifty  cents  per  cubic 
foot,  and  twenty  per  cent.  The  new  rates  of  1870  were 
equivalent  to  between  100  and  150  per  cent,  on  the 
value,  and  proved  to  be  practically  prohibitive.  The 
effect  of  the  marble  duty  and  of  the  change  made  in  it  in 
1870  can  be  understood  only  by  those  who  know  the  cir- 
cumstances under  which  marble  is  produced  and  imported 
in  this  country.  The  only  marble  imported,  and  that 
which  alone  is  affected  by  the  duty,  is  fine  marble  used 
for  ornamental  purposes  in  mantel-pieces,  furniture,  grave- 
stones, etc.  Such  marble  comes  into  use  very  largely  in 
the  shape  of  slabs  of  a  few  inches  in  thickness.  The 
marble  is  imported,  notwithstanding  the  heavy  duty,  from 
Italy,  whence  it  is  brought  cheaply  by  ships  that  have 
taken  out  grain  and  other  bulky  cargoes.  It  is  produced 
in  the  United  States  in  a  single  district  in  Vermont.  The 
owners  of  the  marble  quarries  in  this  district  had  their 
product  raised  in  price  almost  to  the  extent  of  the  duty 
of  80  or  150  per  cent.  The  result  was  to  make  these 
quarries  very  valuable  pieces  of  property,  and  to  put 
very  handsome  profits  into  the  pockets  of  their  owners; 
profits  which  represent  practically  so  much  money  which 
Congress  ordered  those  who  used  ornamental  marble  to 
pay  over  to  the  quarry-owners.1 

Wool  and  woollens,  copper,  steel  rails,  marble,  which  we 
have  now  considered,  are  sufficient  examples  of  the  man- 

1  In  regard  to  the  duty  on  marble,  see  "  Tariff  Commission  Report,"  pp. 
227,  1560,  1648. 


HOW  DUTIES  WERE  RAISED.  22J 

ner  in  which  duties,  already  raised  to  high  figures  during 
the  war,  were  still  further  increased  after  the  war,  for 

the  benefit  of  the  domestic  producers.     Other  instances 

'• f 
could    be   given    in   which  an  equal  disregard       Other 

of     the    consumer     and     taxpayer    has    been    examples, 
,_t  -.  .   ,    flax,  nickel, 

shown.     The  duty  on  flax,  the    raw    material 

of  a  manufacture  not  over-prosperous,  had  been  $15  per 
ton  in  1864;  in  1870  it  was  raised  to  $20  on  undressed 
flax,  and  to  $40  on  dressed  flax.  Nickel  had  been 
admitted  free  of  duty  in  1861,  and  had  paid  only  fifteen 
per  cent,  by  the  act  of  1864.  In  1870  the  duty  was  sud- 
enly  made  thirty  cents  per  pound,  or  about  forty  per 
cent,  on  the  value.  Nickel,  like  marble,  is  produced  in 
only  one  locality  in  this  country.  There  exists  a  single 
nickel  mine,  in  Pennsylvania,  owned  by  a  well-known  ad- 
vocate of  protection,  and,  with  the  aid  of  the  tariff,  this 
mine,  doubtless,  has  yielded  the  owner  very  handsome  re- 
turns.1 Examples  need  not  be  multiplied.  Enough  has 

1  Mr.  Joseph  Wharton,  of  Philadelphia,  is  the  owner  of  the  nickel-mine, 
and  has  appeared  frequently  before  Congressional  Committees  in  advocacy 
of  this  duty  and  of  others.  See  the  "  Tariff  Commission  Report,"  pp.  20 1- 
204.  A  heated  controversy  on  this  subject  was  raised  by  Mr.  Wharton's 
pamphlet,  "The  Duty  on  Nickel"  (Philadelphia:  1883),  with  which  may 
be  compared  the  remarks  of  Mr.  D.  A.  Wells,  in  the  Princeton  Review, 
July,  1883,  pp.  8-1 1. 

In  the  years  after  1870,  the  nickel  situation  was  affected,  first,  by  the  dis- 
covery of  rich  mines  in  New  Caledonia,  controlled  by  a  French  Company ;  and 
next,  about  1889,  by  the  discovery  of  a  rich  mine  in  Canada.  The  Pennsyl- 
vania mine  seems  to  have  shown  signs  of  exhaustion,  and  its  owner  advocated 
the  admission  of  nickel  ore  and  matte  at  a  low  rate  of  duty,  with  the  reten- 
tion of  the  duty  on  nickel  itself  for  the  protection  of  the  works  which  had 
be^n  put  up  to  refine  the  Pennsylvania  nickel.  See  the  statements  of  Mr. 


228  HISTORY  OF   THE  EXISTING   TARIFF. 

been  said  to  show  how  the  increase  of  duties  of  which  the 
war  was  the  immediate  occasion,  continued  after  the  war 
had  ceased. 

The  retention  of  the  high  duties  of  the  war  is  to  be 
explained  by  the  pressure  of  other  problems,  the  fear  of 
infringing  on  vested  rights  and  interests,  the  powerful 
opposition  which  is  always  met  in  withdrawing  public 
bounty  when  once  it  has  been  conferred.  To  explain  the 
additions  to  the  protective  system  made  after  the  war,  by 
measures  like  the  woollens  act  of  1867  and  the  copper  act 
of  1869,  some  regard  must  also  be  had  to  the  influence  of 
private  interests  in  Congress.  The  details  of  these  acts, 
and  of  other  acts  passed  since  the  war,  have  undoubtedly 
been  settled  in  large  part  by  men  who  had  a  direct  pecu- 
niary interest  in  securing  an  increase  of  the  duties.  It 
is  highly  improbable  that  bribery,  direct  or  indirect,  was 
ever  used  to  affect  tariff  legislation.  But  it  may  be  fairly 
said  that  a  general  laxity  of  opinion  on  the  duties  of 
public  men  enabled  provisions  to  find  their  way  into 
tariff  legislation  which  could  not  have  been  carried 
through  in  a  more  healthy  state  of  affairs.  The  demor- 
alization  has  shown  itself  quite  as  strikingly  in  other  parts 
of  federal  legislation  as  in  tariff  matters ;  it  has  shown 
itself  most  strikingly  of  all  in  some  State  legislatures  and 
in  municipal  administration.  During  the  period  imme. 
diately  after  the  war,  the  state  of  things  was  probably 

Wharton  and  others  in  the  Senate  "Tariff  Testimony"  of  1888-89,  pp. 
1347-64,  and  in  the  House  "  Repor'  on  th.\  Revision  of  the  Tariff,"  18901 
pp.  052-1161. 


HOW  DUTIES  WERE  RAISED.  229 

worse  than  at  any  other  time  in  our  history.  The  redun- 
dant currency  promoted  speculation  and  gambling ;  jobs 
were  plenty  and  lobbyists  strong ;  some  legislators  thought 
it  not  improper  to  become  "  interested  "  in  enterprises 
which  their  votes  might  affect,  and  few  Congressmen  hes- 
itated to  advocate  measures  that  would  put  money  in  the 
pockets  of  influential  constituents.  Conditions  of  this 
sort  account  largely  for  the  higher  duties  of  the  years 
after  the  war.  It  cannot  be  said  that  there  was  any  con- 
sistent  policy  or  sustained  public  opinion  in  favor  of  ex- 
tending the  protective  system. 


CHAPTER  IV. 

THE   TARIFF  ACT  OF  1883. 

THE  tariff  act  of  1883  made  the  first  general  revision 
since  the  Civil  War,  apart  from  the  abortive  horizontal 
reduction  of  1872.  After  the  crisis  of  1873,  little  or  noth- 
ing was  heard  about  the  tariff.  Currency  questions  came 
into  prominence  during  the  period  of  depression.  The 
successful  resumption  of  specie  payments  in  1879,  and  tne 
revival  of  prosperity  which  set  in  at  the  same  time,  finally 
diverted  public  attention  from  the  monetary  situation ; 
and  the  same  set  of  causes  contributed  to  centre  attention 
once  more  on  the  tariff  system.  The  revival  of  activity 
in  1879  and  the  years  following  caused  a  great  increase  in 
imports,  and  so  a  great  increase  in  the  customs  revenue. 
For  several  years  after  1879,  the  surplus  revenue  was 
on  the  average  over  a  hundred  millions  annually.  The 
redundant  revenue  compelled  a  revision  of  the  customs 
duties,  and  it  was  inevitable  that  not  only  the  financial 
but  the  economic  aspects  of  the  tariff  should  once  more 
become  prominent. 

The  connection  between  tariff  legislation  and  the  state 
of  the  revenue  has  indeed  been  almost  constant  in  our  his- 
tory. In  1842  an  empty  treasury  was  followed  by  the  pas' 

230 


THE    TARIFF  ACT  OF   1883.  23! 

sage  of  a  high  protective  tariff.  In  1857  an  overflowing 
revenue  caused  a  reduction  of  the  duties.  In  1861  the 
Morrill  tariff  was  passed,  partly  injorder  to  make  good  a 
deficit.  During  the  war  the  need  of  money  led  to  the  act 
of  1864.  The  ten  per  cent,  reduction  of  1872 
was  called  out  largely  by  the  redundant  revenue ;  gltatl° 

on  the  tariff 

its  abolition  in  1875  was  excused  by  the  falling    renewed 
off  in  the  government  income.     The  protection- 
ist acts  of  1824  and  1828  and  the  so-called  revenue  act  of 
1846,  stand    practically  alone  as  general  measures  little 
affected  by  the  -state  of  the  revenue  at  the  time.     Since 
the  Civil  War,  the  financial  situation  has  usually  given  the 
occasion  for  changes  in  the  tariff  rates  ;  and  this  is  true 
of  the  act  of  1883,  as  well  as  of  the  acts  of  1890  and  1897. 
In  1882  Congress  passed  an  act  for  the  appointment 
of  a  Tariff  Commission,  which  was  to  report  at      Tariff 
the  next  session  of  Congress  what  changes  it  Commission 
thought  desirable.     The  majority  in  Congress 
then  was  protectionist,  and  of  the  gentlemen  appointed 
by   the  President  on   this   commission  a  majority  were 
advocates  of  high  protection ;  while  no  member  could  be 
said  to  represent  that  part  of  the  public  which  believed 
a  reduction  of  the  protective  duties  to  be  desirable.     Mr. 
John  L.  Hayes,  the  secretary  of  the  Wool  Manufacturers' 
Association,  was  president  of  the  commission.     Its  report 
was  laid  before  Congress  at  the  beginning  of  the  session  of 
1882-83.     At  first  no  action  on  this  report  or  on  the  tariff 
seemed  likely  to  be  taken  ;  for  the  House,  in  which  rev- 
enue bills  must  originate,  was  unable  to  agree  on  any 


232  HISTORY   OF   THE  EXISTING   TARIFF. 

bill.  But  the  House  having  passed  a  bill  for  the  re- 
duction  of  some  of  the  internal  taxes,  the  Senate  tacked 
to  this  bill,  as  an  amendment,  a  tariff  bill,  based,  in 
the  main,  on  the  recommendations  of  the  Tariff  Com- 
mission. When  this  bill  came  before  the  House  the 
protectionists  again  succeeded,  as  in  1872,  in  obtaining  a 
parliamentary  victory.  By  an  adroit  manoeuvre  they  man- 
iged  to  have  it  referred  to  a  conference  committee.1  In 
this  committee  the  details  of  the  tariff  act  were  finally  set- 
tled ;  for  the  bill,  as  reported  to  the  Senate  and  House  by 
the  conferees  of  the  two  bodies,  was  passed  by 

them  and  became  law.     The  object  of  the  ma- 
how  passed, 
noeuvre  was  to  check  the  reduction  of  duties  as 

it  appeared  in  the  Senate  bill;  and  this  object  was  attain- 
ed. The  changes  made  by  the  conference  committees 
were,  as  a  rule,  in  a  protectionist  direction.  The  duties 

1  This  manoeuvre  was  a  curious  example  of  the  manner  in  which  the  rules 
of  Congress  are  manipulated  in  order  to  affect  legislation.  A  two-thirds  vote, 
by  the  existing  rules,  was  required  to  bring  the  Sen  ate  bill  before  the  House. 
A  two-thirds  majority  in  favor  of  the  bill  could  not  be  obtained  ;  though  it 
was  probable  that  on  a  direct  vote  a  majority  in  its  favor  could  have  been  got. 
The  protectionists  wished  to  have  the  bill  referred  to  a  conference  commit- 
tee, which  would  probably  act  in  the  direction  desired  by  them.  For  this 
purpose  a  resolution  was  introduced  by  Mr.  Reed,  of  Maine,  providing  for 
a  new  rule  of  the  House,  by  which  a  bare  majority  was  to  have  power  to 
take  up  a  bill  amended  by  the  Senate  for  the  purpose  of  non-concurrence  in 
the  Senate  amendments,  but  not  for  the  purpose  of  concurrence.  By  the  pas- 
sage of  this  rule  a  majority  of  the  House  could  take  up  the  tariff  bill,  and 
then  refuse  to  concur  in  the  Senate  amendments  ;  but  under  this  rule  the 
amendments  could  not  be  concurred  in.  There  was,  consequently,  no 
possibility  of  passing  the  tariff  bill  in  the  shape  in  which  it  came  from  the 
Senate.  The  bill  had  to  be  referred  to  a  conference  committee  ;  and  in 
that  committee,  as  the  text  states,  the  details  of  the  bill  were  settled.  The 
Reed  rule,  though  made  a  permanent  rule  of  the  House,  was  passed  merely 
in  order  to  attain  this  object. 


THE   TARIFF  ACT  OF  1883.  233 

on  a  number  of  articles  were  raised  by  the  committee 
above  the  rates  of  the  Senate  bill,  and  even  above  the 
rates  which  the  House  had  shown  a  willingness  to  accept. 
The  consequence  was  that  the  tariff  act,  as  finally  passed, 
contained  a  much  less  degree  of  reduction  than  the  origi- 
nal Senate  bill;  and  it  was  passed  in  the  Senate  only  by 
a  strict  party  vote  of  32  to  31,  while  the  original  Senate 
bill  had  been  passed  by  a  vote  of  42  to  19.' 

In  taking  up  the  provisions  of  the  act  of  1883,  it  will 
be  best  to  consider  first  those  cases  in  which  an  increase 
in  the  duties  was  made.  Changes  of  this  sort  were  made 
in  a  considerable  number  of  cases,  and  are  significant  of 
the  general  character  of  the  measure.  To  begin  with, 
the  duties  on  certain  classes  of  woollen  goods  were  raised. 

1  Mr.  Morrison,  in  1884,  said  :  "  The  office  and  duty  of  a  conference  com- 
mittee is  to  adjust  the  difference  between  two  disagreeing  houses.  This 
House  had  decided  that  bar-iron  of  the  middle  class  should  pay  $20  a  ton  ; 
the  Senate  that  it  was  to  pay  $20.16  a  ton.  The  gentlemen  of  the  confer- 
ence committee  reconciled  this  difference — how?  By  raising  bar-iron  [of 
this  class]  above  both  House  and  Senate  to  $22.40.  The  Tariff  Commission 
reported  that  the  tariff  on  iron  ore  should  be  50  cents  a  ton.  The  Senate 
said  it  should  be  50  cents  a  ton.  The  House  said  it  should  be  50  cents  a 
ton.  Gentlemen  of  the  conference  committee  reconciled  the  agreement  of 
the  House,  Senate,  and  Tariff  Commission  into  a  disagreement,  and  made 
the  duty  on  iron  ore  75  cents  a  ton.  The  gentlemen  of  the  conference  did 
a  similar  service  for  the  great  corporation  of  corporations,  the  Iron  and  Steel 
Association,  by  giving  it  a  tax  of  $i  7  on  steel  rails,  which  the  House  had 
fixed  at  $15  and  the  Senate  at  $15.68  per  ton."  Quoted  in  Nelson's  "  Un- 
just Tariff  Law,"  pp.  22,  23.  Cf.  remarks  to  the  same  effect  by  Senator 
Beck,  who  was  a  member  of  the  conference  committee. — Cong.  Record,  1883- 
84,  p.  2786. 

The  conferrees  for  the  Senate  were  Messrs.  Morrill,  Sherman,  Aldrich, 
Bayard,  .and  Beck  ;  for  the  House,  Messrs.  Kelley,  McKinley,  Haskell, 
Randall,  and  Carlisle.  All  but  three  (Bayard,  Beck,  and  Carlisle)  were 
strong  protectionists. 


234  HISTORY  OF  THE  EXISTING   TARIFF. 

On  most  woollens  the  figures  were  lowered  ;  though,  as 
will  be  seen,  the  reduction  in  these  cases  was  not  such  as 
to  bring  any  benefit  to  consumers.  But  on  certain  classes 
of  woollens,  on  which  a  reduction  of  duty,  if  made,  would 
have  been  of  real  importance,  the  duties  were  advanced. 
This  was  the  case  with  dress  goods  made  wholly  of  wool. 
Under  the  act  of  1867  such  goods  had  paid  a  maximum 
duty  of  eight  cents  per  yard  and  forty  per  cent.  The 
forty  per  cent,  rate  on  these  goods  had  already  been  above 
the  general  ad-valorem  duty  of  thirty-five  per  cent,  estab- 
lished by  the  act  of  1867.  Nevertheless  the  act  of  1883 
increased  the  duty  on  these  goods  to  nine  cents  a  yard 
and  forty  per  cent.  The  Tariff  Commission  had  even 
recommended  twelve  cents  a  yard  and  forty  per  cent. 
Goods  of  this  class  were,  and  still  are,  the  largest  single 
item  in  the  importations  of  woollens  into  the  United 
States.  They  are  made  to  no  very  great  extent  by  the 
domestic  manufacturers.  The  new  duty  was  intended  to 
enable  the  latter  to  engage  profitably  in  making  them  ; 
since  the  old  duty,  though  it  amounted  in  all  to  more 
than  sixty-five  per  cent,  on  the  value  of  the  imports,  had 
not  sufficed  for  this  purpose.  The  increase  in  the  specific 
duty  was  not  supposed  to  be  necessary  to  give  more 
effective  compensation  for  the  wool  duty  ;  in  fact,  as 
we  shall  see,  the  duty  on  wool  was  slightly  lowered,  so 
that  the  compensating  duty,  if  changed  at  all,  should  have 
gone  down.  The  new  duty  was  a  concession  to  the  de- 
mand of  the  manufacturers  for  still  further  protection.1 

1  The  Tariff  Commission,  in  its  "Report  "  (p.  31),  said  :   "  The  new  clause 
in  relation  to  all-wool  merino  goods  is  a  new  provision,  and  has  in  view  the 


THE   TARIFF  ACT  OF  1883.  235 

It  did  not  attain  its  object  ;  all-wool  dress  goods  con- 
tinued to  be  imported,  and  few,  if  any,  were  made  at 
home  ;  and  in  time  a  still  further  increase  of  duty  was 
asked,  and  at  last  was  granted  in  the  tariff  act  of  1890. 

Next  to  dress  goods,  such  as  were  discussed  in  the 
preceding  paragraph,  the  class  of  woollens  of  which  the 
importations  were  largest  were  the  finer  grades  of  cloths 
and  cassimeres.  The  importation  of  these  went  on  stead- 
ily in  large  quantities.  Their  production  was  carried  on 
in  this  country  only  to  a  limited  extent.  It  is  not  sur- 
prising, therefore,  to  find  here  also  a  rise  of  the  rates  in 
the  act  of  1883.  Cloths  were  divided  into  two  classes: 
those  costing  more  and  those  costing  less  than  eighty 
cents  per  pound.  The  latter,  costing  less  than  eighty 
cents,  were  admitted,  as  before,  at  an  ad-valorem  duty  of 
thirty-five  per  cent.  But  the  former,  costing  more  than 
eighty  cents  per  pound,  were  made  to  pay  forty  per  cent. 
The  specific  compensating  duty  was  reduced  somewhat  in 
both  cases,  in  connection  with  the  lower  duties  on  wool, 
which  will  presently  be  discussed  ;  but  the  ad-valorem 
rate,  that  which  is  avowedly  protective,  was  increased. 
This  increase  also  did  not  have  the  desired  effect ;  im- 
portations continued  in  large  volume ;  and  here  again 
a  further  advance  in  duties  was  asked  and  obtained  in 
1890. 

A  change  of  almost  the  same  kind  was  made  in  the 

introduction  of  fabrics  never  yet  successfully  made  in  this  country.  Many 
of  these  goods  constitute  staple  fabrics  *  *  *  and  their  manufacture 
would  be  a  desirable  acquisition  to  our  national  industry."  The  duties  of 
the  act  of  1883  on  wool  and  woollens  were  discussed  in  detail  by  Mr. 
Hayes  in  Bulletin  Wool  Mf.,  xiii.,  1-13.  80^-128. 


236  HISTORY    OF   THE  EXISTING    TARIFF. 

duties  on  cotton  goods.  Here  also  the  duty  was  lowered 
on  the  common  grades  of  goods  ;  and  on  these  grades  the 
reduction  was  again  a  purely  nominal  one.  But  on  other 
grades  of  cotton  goods,  whose  importation  still  continued, 
and  on  which  a  decrease  in  the  duty  would  have  caused 
some  lowering  of  prices  and  relief  from  taxation,  there 
was  no  reduction,  but  an  increase.  The  duty  on  cotton 
hosiery,  embroideries,  trimmings,  laces,  insertings,  had 
been  thirty-five  per  cent,  under  the  old  law.  In  the  act 
of  1883  it  was  made  forty  per  cent.  The  duty  of  thirty- 
five  per  cent,  had  been  imposed  during  the  war,  in  1864, 
at  a  time  when  raw  cotton  was  taxed,  and  the  manufac- 
tured cotton  also  paid  a  heavy  internal  tax.  This  rate  had 
remained  unchanged  from  1864  till  1883,  notwithstanding 
the  abolition  of  the  internal  taxes.  The  importance  of 
the  new  duty  of  forty  per  cent,  is  clear  only  when  we 
know  that  imports  of  cottons  consist  chiefly  of  goods  of 
the  class  on  which  the  duty  is  raised.  About  two  thirds 
of  the  cottons  imported  became  subject  to  the  increased 
duty. 

The  process  by  which  the  protective  system  has  gradu- 
ally been  brought  to  include  almost  every  article,  what- 
ever its  character,  whose  production  in  the  country  is 
possible,  is  illustrated  by  the  history  of  the  duty  on  iron 
ore.  This  most  raw  of  raw  materials  had  paid  in  1861  a 
duty  of  ten  per  cent,  as  an  unenumerated  article ;  and  the 
rate  had  not  been  changed  during  the  war,  since  the  arti- 
cle was  not  one  likely  to  be  imported  or  to  yield  revenue. 
In  1870,  when  the  protective  principle,  as  we  have  seen, 


THE    TARIFF  ACT  OF  1883.  237 

was  applied  with  greater  strictness  in  various  directions, 
the  duty  was  raised  to  twenty  per  cent.  In  later  years 
iron  ore  began  to  be  imported  in,  considerable  quantities, 
especially  from  Spain;  and  the  duty  was  raised  in  1883 
to  seventy-five  cents  per  ton,  or  about  thirty-five  per  cent, 
on  the  value. 

Still  another  instance  of  the  advance  of  duties  in  the 

new  act  was  in  the  rates  on  certain  manufactures  of  steel. 

Here,  as  has  so  often  happened,  the  increase 

Steel. 

was  concealed  under  what  was  in  appearance 
merely  a  change  in  classification.  The  duties  on  steel 
ingots,  bars,  sheets,  and  coils  had  been,  until  1883,  those 
fixed  in  the  tariff  of  1864, — from  two  and  one  quarter 
cents  to  three  and  one  half  cents  per  pound,  varying  with 
the  value  of  the  steel.  The  act  of  1883  reduced  these 
duties  slightly,  making  them  from  two  to  three  and  a 
quarter  cents  per  pound.  But  previous  to  1883  "  steel,  in 
forms  not  otherwise  specified,"  had  been  admitted  at  a 
duty  of  thirty  per  cent.  Under  this  provision,  which  had 
been  in  force  since  1864,  a  number  of  articles,  like  cogged 
ingots,  rods,  piston-rods,  steamer  shafts,  and  so  on,  had 
paid  only  thirty  per  cent.  The  act  of  1883,  however, 
specificially  enumerated  these  and  other  articles,  and  put 
them  in  the  same  schedule  with  steel  ingots  and  bars, — 
that  is,  compelled  them  to  pay  a  duty  of  from  two  to  three 
and  a  quarter  cents  a  pound.  The  effect  was  a  consider- 
able rise  in  the  duties  on  the  newly  enumerated  articles. 

The.se  examples  indicate  the  mode  and  the  extent  in 
which  the  protective  system  was  extended  in  the  act  of 


538  HISTORY  OF  THE  EXISTING   TARIFF. 

1 883.  As  a  rule,  duties  were  advanced  on  protected  articles 
of  which  importations  continued  in  considerable  volume. 
The  advance  was  by  no  means  universal,  being  affected, 
as  our  tariff  legislation  so  often  has  been,  by  the  hap- 
hazard manner  in  which  the  details  of  the  measure  were 
finally  settled.  But  it  was  made  in  so  large  a  number  of 
important  cases  as  to  give  the  act  a  distinctly  protectionist 
flavor.  Such  extensions  of  the  protective  system  prob- 
ably were  not  at  that  time  expected  or  desired  by  the 
public.  The  Tariff  Commission  had  been  given  the  task 
of  revising  the  tariff  "judiciously."  The  rates  recom- 
mended by  it  were  declared  to  effect  a  general  reduction 
of  twenty  per  cent,  or  more,  and  the  declared  object  of 
the  leaders  in  the  dominant  party  was  to  make  a  reform 
in  the  tariff  system.  Reform  then  was  still  understood  to 
mean  reduction,  and  real  reduction,  in  the  protective 
duties ;  and  an  actual  increase  in  rates,  such  as  we  have 
seen  on  cottons,  woollens,  and  other  articles,  was  no  part  of 
what  the  public  expected  or  the  act  professed  to  do.  In 
truth,  these  changes  were  made  in  good  part  without  plan 
or  consistency,  as  so  many  details  have  been  settled  in  our 
statutes:  a  result  inevitable  from  the  absence,  in  our 
system,  of  concentrated  responsibility  for  the  details  of 
legislation.  Some'  advances  were  proposed  by  the  Tariff 
Commission,  others  by  the  House  and  Senate  Commit- 
tees; some  by  amendments  in  the  House,  others  by 
amendments  in  the  Senate;  not  a  few,  as  was  noted 
above,  were  finally  settled  in  the  Conference  Committee. 
In  many  cases,  they  were  half  concealed  by  changes  in 


THE   TARIFF  ACT  OF  188$.  239 

classification,  or  coupled  with  reductions  of  other  articles 
in  the  same  schedules.  Had  a  separate  bill  been  brought 
forward,  proposing  the  higher  duties  contained  in  the  act, 
it  certainly  could  not  have  passed. 

We  may  turn  now  to  an  examination  of  the  cases 
in  which  duties  were  reduced  in  1883. 

The  schedules  in  the  tariff  which  have  the  greatest 
effect  on  the  welfare  of  the  country  are  those  fixing  the 
duties  on  iron  and  wool ;  and  to  these  we  will  first  give 
our  attention.  The  change  in  the  duty  on  wool  was  suffi- 
ciently simple.  The  ad-valorem  rate  was  taken  off.  The 
duty  of  1867,  it  will  be  remembered,  had  been,  on  wools 
costing  less  than  thirty-two  cents,  ten  cents  per  pound 
plus  eleven  per  cent,  ad  valorem,  and,  on  wools  costing 
more  than  thirty-two  cents,  twelve  cents  per  pound  plus 
ten  per  cent,  ad  valorem.  These  ad-valorem  rates  of 
eleven  and  ten  per  cent,  were  taken  off,  and  the  rates  left 
simply  at  ten  and  twelve  cents  per  pound.  In  regard  to 
the  greater  part  of  the  wools  raised  in  the  United  States, 
this  reduction  was  purely  nominal.  It  left  the  duty  on  the 
cheaper  grades  of  wool,  raised  in  Texas  and  in  the  Terri- 
tories, at  a  point  where  it  was  still  entirely  prohibitory. 
So  far  as  concerns  the  higher  grades  of  wools,  such  as  are 
raised  in  Ohio  and  neighboring  States,  the  reduction  was 
real,  though  so  small  in  amount  that  it  practically  left  the 
situation  unchanged.1  On  carpet  wools  the  duty  was 

1  The  duty  in  the  act  of  1883  was  ten  cents  on  wool  costing  thirty  cents  or 
less,  and  twelve  cents  on  that  costing  more  than  thirty  cents.  The  change 
(in  the  line  of  division,  according  to  value)  from  thirty-two  to  thirty  cents 
WSLS  not  without  importance  ;  and,  as  far  as  it  went,  it  evidently  tended  to 
neutralize  the  reduction.  See  th«  BuM'tin  WoolMf,.  yiii.,  n,  log. 


240  HISTORY   OF   THE  EXISTING    TARIFF. 

reduced  from  the  former  rates  of  six  and  three  cents 
a  pound,  to  five  and  two  and  a  half  cents.  These  wools 
are  practically  not  raised  in  the  United  States  at  all ;  and 
the  reduction  on  them  was  again  real,  though  slight. 

On  the  whole,  the  changes  in  the  duty  on  this  raw 
material  indicated  a  desire  to  make  concessions  to  the 
opponents  of  protection.  Greater  reductions  would  prob- 
ably hav^jeeji.  qjgde  but  for  the  fear  of  arousing  among 
the  wooySrowers  a  feeling  of  opposition  to  the  protective 
system  af|jp3faiiole.  Little  can  be  said  in  favor  of  the 
cutM  on  wool ;  and  even  on  strictly  protectionist  grounds 
mu(M  can  be  said  against  it.  Notwithstanding  the  cum- 
brous machinery  of  compensating  duties,  it  undoubtedly 
has  amampering  influence  on  the  wool  manufacture,  and 
has  been  one  factor,  though  perhaps  not  the  most  im- 
portant, in  confining  this  industry  to  the  limited  range 
that  is  so  often  complained  of.  As  a  tax  on  raw  materials, 
it  tends  to  bear  with  heavier  weight  than  would  be  the 
case  with  the  same  duty  on  a  finished  product ;  since  it  is 
advanced  again  and  again  by  the  wool  dealer,  the  manu- 
facturer, the  cloth  dealer,  the  tailor,  each  of  whom  must 
have  a  greater  profit  in  proportion  to  the  greater  amount 
of  capital  which  the  wool  duty  and  the  higher  price  of 
wool  make  it  necessary  for  him  to  employ.  So  strong 
and  so  clear  are  the  objections  to  duties  of  this  kind  that 
hardly  another  civilized  country,  whatever  its  general 
policy,  attempts  to  protect  wool.1 

1  Not  only  England,  but  countries  like  France,  Germany,  Austria,  Italy, 
which  have  applied  protective  duties  in  recent  years,  admit  wool  free. 


THE   TARIFF  ACT  OF  1883.  241 

Moreover,  the  reduction  of  a  duty  of  this  kind  can 
take  place  with  exceptional  ease.  Wool  is  not  produced, 
as  a  rule,  in  large  quantities,  by,  persons  who  devote 
themselves  exclusively  to  this  as  a  business.  It  is  mainly 
produced  by  farmers,  whose  chief  income  comes  from 
other  sources,  and  on  whom  a  reduction  of  duty  and  a 
fall  of  price  would  fall  with  comparatively  little  weight. 
In  the  Western  States  and  Territories,  it  is  true,  wool 
is  grown  on  large  sheep  ranches,  by  producers  with 
whom  it  is  not  a  subsidiary  business.  But  the  qualities 
of  wool  grown  there  are  least  affected  by  the  duty. 
While  the  price  of  Territory  wools  is  probably  higher 
than  the  price  of  similar  wools  abroad,  it  is  by  no  means 
higher  by  the  full  extent  of  the  duty.  The  argument  for 
the  consideration  of  vested  interests  is  consequently  less 
strong  than  in  the  case  of  manufactures  in  which  a  large 
plant  is  invested,  and  where  the  interests  of  a  large  body 
of  workmen  are  involved  in  the  retention  of  things  as 
they  are. 

We  turn  now  to  the  reductions  of  duty  on  woollen 
goods,  which  would  naturally  follow  the  lower  duty  on 
wool.  It  has  been  seen  that  the  ad-valorem,  or 

Woollens. 

protective,  duty  was  not  decreased  at  all,  and 
that  on  the  finer  classes  of  woollens  it  was  increased  from 
thirty-five  to  forty  per  cent.  But  the  specific,  or  compen- 
sating, duty  was  reduced  from  fifty  cents  to  thirty-five 
cents  a  pound.  The  woollens  duty  of  1883  was  thirty-five 
cents  a  pound  and  thirty-five  per  cent,  on  goods  costing 

less  than  eighty  cents  per  pound,  and  thirty-five  cents 
16 


242  HISTORY  OF   THE  EXISTING   TARIFF. 

and  forty  per  cent,  on  goods  costing  more  than  eighty 
cents.  The  lowering  of  the  specific  duty  was  in  part 
called  for  by  the  reduction  of  the  duty  on  wool ;  but  the 
decrease  was  somewhat  larger  than  the  reduced  duty  on 
the  raw  material  made  necessary.  The  compensating 
duty  in  the  new  act  was  fixed  on  the  assumption  that  no 
more  than  three  and  one  half  pounds  of  wool  are  used  in 
making  a  pound  of  cloth  ;  whereas  the  act  of  1867,  it  will 
be  remembered,  was  framed  on  the  basis  of  four  pounds 
of  wool  to  the  pound  of  cloth.  This  may  be  called  a  tacit 
confession  that  the  compensating  duty  of  1867  had 
been  excessive ;  and  the  new  arrangement  took  away 
some  of  the  protection  which  was  formerly  given  by  the 
specific  duty.  But  the  changes  were  more  nominal  than 
real.  So  far  as  the  finer  grades  of  woollens  were  con- 
cerned, it  was  more  than  offset  by  the  increase  in  the 
ad-valorem  duty  from  thirty-five  to  forty  per  cent.  So 
far  as  the  cheaper  grades  of  woollens  were  concerned,  it 
had  no  real  effect.  The  duty  on  these  was  prohibitory 
before,  and  it  remained  prohibitory.  Such  a  change  has 
no  effect  on  trade  or  prices,  and  brings  no  benefit  to  con- 
sumers. Precisely  similar  is  the  state  of  things  in  regard 
to  flannels,  blankets,  and  similar  goods.  On  these  also  the 
specific  duty  was  reduced,  on  the  cheapest  grades  from  a 
rate  of  twenty  cents  a  pound  to  rates  of  ten  and  twelve 
cents.  But  the  new  rates  were  still  high  enough  to  shut 
out  importation,  and  brought  about  no  change  beyond 
that  of  the  figures  on  the  statute-book.1 

1  Complaint  was  made  that  the  act  of  1883  reduced  the    duties  on  goods 
more   than   the   duties  on   wooU      •**»  M&   Hayes's  articles  in    Bulletin 


THE   TARIFF  ACT  OF  1883.  243 

Changes  of  precisely  this  kind  are  to  be  found  in  other 
parts  of  the  act  of  1883.     The  rates  on  the  cheap  grades 

of  cotton  goods,  for  instance,  show>a  considera- 

Cottons. 
ble  reduction.    On  the  lowest  class  of  unprinted 

goods  the  duty  had  been  five  cents  per  yard  ;  it  was  made 
two  and  one  half  cents.  But  the  old  duty  had  for  many 
years  ceased  to  have  any  appreciable  effect  on  the  prices 
of  cotton  goods.  The  common  grades  of  cottons  can  be 
made,  as  a  rule,  as  cheaply  in  this  country  as  anywhere  in 
the  world  ;  in  fact,  some  of  them  are  regularly  exported 
in  large  quantities.  If  the  duty  on  such  cottons  were 
entirely  abolished,  it  is  probable  that  they  could  not  be 
imported  ;  and  it  is  certain  that  a  very  small  duty  would 
suffice  to  shut  out  from  our  market  all  foreign  competi- 
tors in  them.  Under  these  circumstances  a  reduction  of 
duty  like  that  of  1883  could  be  of  no  effect  whatever.  The 
same  holds  good  of  almost  all  the  various  reductions  in 
the  specific  duties  on  plain  and  printed  cotton  goods. 

Wool  M/.,  vol.  xiii.  This  was  certainly  the  case  with  worsted  goods, 
which  were  admitted  at  specific  duties  not  sufficient  to  compensate  for  the 
duties  on  wool.  The  mistake  in  adjusting  these  duties  was  made  by  Mr. 
Hayes  himself,  in  the  bill  framed  by  the  Tariff  Commission.  It  led  to  a 
long  struggle  on  the  part  of  the  manufacturers  to  get  a  construction  of  the 
act  of  1883  making  worsteds  dutiable  as  woollens.  The  Democratic  admin- 
istration of  1885—89  refused  to  adopt  such  a  construction  ;  the  Republican 
administration  in  1889  did  so,  but  the  courts,  when  a  case  was  tried  before 
them,  promptly  decided  that  the  remedy  was  not  to  be  found  by  miscon- 
struing the  statute  ;  and  in  1890  a  special  act  was  passed,  in  advance  of  the 
general  tariff  act  of  that  year,  making  Mrorsteds  dutiable  as  woollens.  A 
good  brief  statement  of  this  episode  is  in  the  Report  of  the  Secretary  of 
the  Treasury  for  i88j,  p.  35.  The  Bulletin  Wool  Mf.  is  full  of  it  from 
1886  to  1889,  and  a  detailed  account  of  the  last  steps  in  1889  is  in  vol.  xx. 
The  special  act  is  in  26  Statutes  at  JLar^  105. 


.244  HISTORY   OF   THE  EXISTING   TARIFF. 

These  changes  also  were  nominal.  On  the  other  hand,  in 
the  case  of  the  finer  cotton  goods,  laces,  and  trimmings,  on 
which  a  lowering  of  the  rates  would  have  been  of  real 
effect,  there  was,  as  we  have  seen,  no  decrease,  but  an 
increase. 

The  duty  on  pig-iron  was  reduced  from  $7.00  to  $6.72 
a  ton.  This  change  was  insignificant,  hardly  two  per 
cent,  on  the  foreign  price  of  iron.  A  greater 
could  have  been  made  without  danger  of  any 
disturbance  of  the  iron  trade.  The  same  was  the  case 
with  the  reduction  on  bar-iron,  which,  on  the  ordinary 
grade,  lowered  the  duty  from  one  cent  a  pound  to  eight 
tenths  of  a  cent.  The  reduction  still  left  the  duty  high 
enough  to  prevent  any  lowering  of  prices  and  any  effect 
on  trade.  The  duties  on  the  various  forms  of  manufac- 
tured iron — hoop,  band,  sheet,  plate  iron— went  down  in 
much  the  same  way.  The  reductions  were  slight  in  all 
cases,  and  often  merely  nominal.  In  general,  the  new 
rates  on  iron  and  its  manufactures  were  such  as  to  have 
no  appreciable  effect  on  the  trade  and  welfare  of  the 
country. 

The  duty  on  steel  rails  showed  a  considerable  reduction. 

The  old  rate  had  been  $28  a  ton ;  the  new  one 

was  $17.     If  this  change  had  been  made  four 

or  five  years  earlier,  it  would  have  been  of  much  practical 

importance ;  but  when  made,  it  had   no  effect  whatever. 

It  has  already  been  said  that,  after  the   enormous  profits 

made  by  the  steel-rail  makers  in  1879-1881,  the  production 

in  this  country  was  greatly  increased.     At  the  same  time 


THE    TARIFF  ACT  OF  1883.  245 

the  demand  from  the  railroads  fell  off,  and  the  huge  quan. 
titles  which  the  mills  were  able  to  turn  out,  could  be 
disposed  of,  if  at  all,  only  at  prices  greatly  reduced.  The 

f  '  f 

consequence  was  that  the  price  of  rails,  which  in  1880 
was  higher  than  the  English  price  by  the  full  extent  of 
the  duty  of  $28,  fell  rapidly  after  1881,  and  brought  the 
American  price  in  1885  to  a  point  but  little  above  the 
English.  The  new  duty  of  1883  was  under  these  circum- 
stances still  prohibitory.  In  1887,  when  a  revival  of 
railway  building  set  in,  the  price  of  rails  again  went  up. 
It  is  probable  that  at  this  time,  when  there  was  an  active 
demand  for  rails,  the  decline  of  the  duty  to  $17  was  of 
real  effect,  preventing  the  American  price  from  rising  as 
high  as  it  would  have  gone  if  the  old  duty  had  been 
retained.  But  the  demand  fell  off  quickly  after  1887; 
the  American  price  fell  correspondingly,  and  soon  became 
higher  than  the  English  price  by  an  amount  much  less 
than  the  duty  of  $17.  With  the  possible  exception  of  the 
year  1887,  the  duty  of  $17  was  as  much  a  prohibitory  one 
as  the  old  duty  of  $28  had  been,  and  the  reduction  on 
the  whole  was  as  much  nominal  as  those  in  other  parts  of 
the  iron  schedule.1 

Analogous  in  its  effects  to  the  reduction  on  steel  rails 
was  that  on  copper.  The  duty  on  this  article  went  down 
from  five  cents,  the  rate  imposed  in  1869,  to  four  cents 
a  pound.  The  duty  on  copper  had  enured  to  the  benefit 
of  the  owners  of  the  copper  mines  of  Lake  Superior, 

1  For  figures  as  to  the  "reduction  and  prices  of  steel  rails,  see  Ap- 
pendix VI. 


246  HISTORY  OF  THE  EXISTING   TARIFF. 

aiding  them  to  combine  and  fix  the  price  of  copper 
without  fear  of  competition  from  abroad.  The  great 
profits  of  their  mines  caused  them  steadily  to  increase 
their  product ;  and  although  much  of  their  surplus  was 
disposed  of  abroad,  at  prices  lower  than  those  demanded 
at  home,  the  growing  supply  caused  the  domestic  price 
slowly  to  fall.  The  discovery  of  large  deposits  of  copper, 
in  latter  years,  in  Montana  and  Arizona,  and  the  ship- 
ment to  market  of  a  great  deal  of  copper  from  these 
sources,  broke  for  a  while  the  monopoly  of  the  Lake 
Superior  combination,  and  caused  the  price  to  go  down 
still  farther.  Importation  of  copper  in  any  considerable 
quantities  ceased  many  years  ago.  The  steady  increase 
in  the  domestic  supply  brought  the  price  to  a  point  but 
little  above  the  foreign  price.  The  maintenance  of  the 
duty  still  enabled  the  combined  copper  producers  at 
times  to  secure  a  higher  price  than  they  could  have  got 
without  the  duty ;  but  under  ordinary  conditions  the 
enormous  quantities  of  copper  yielded  by  the  mines 
compelled  a  price  to  be  accepted  virtually  as  low  as  the 
foreign  price. 

The  cases  of  copper  and  steel  rails  are  sometimes  re- 
ferred to  as  successful  applications  of  protection  to  young 
industries.  On  the  surface,  the  object  of  such  protection 
seems  here  to  have  been  obtained.  That  the  price  of 
these  articles  fell  after  the  duty  was  imposed,  indeed 
proves  nothing ;  for  their  prices  fell  the  world  over.  But 
their  prices  fell  faster  than  in  foreign  countries,  and  fell 
nearly,  if  not  quite,  to  the  foreign  level ;  and  a  price  as 


THE    TARIFF  ACT  OF  1883,  247 

low  as  the  foreign  price,  or  lower,  is  the  object  sought 
by  protection  to  young  industries.  This  result,  however, 
was  not  the  consequence,  in  the  case  of  copper  certainly, 
of  any  stimulus  given  by  the  duty  to  improved  methods 
of  production.  It  was  the  result  of  the  extraordinary 
richness  of  the  copper  mines,  whose  discovery  and  use 
was  not  affected  by  the  duty,  and  would  have  brought 
the  price  down  even  sooner  had  it  not  been  for  the  duty. 
The  duty,  so  far  from  stimulating  the  fall  in  price,  checked 
it.  Much  the  same  is  true  of  steel  rails.  To  be  sure, 
here  there  seems  to  have  been  some  stimulus  to  invention, 
and  some  advance  by  American  works  over  the  processes 
in  use  abroad  ;  but  in  the  main  the  decline  in  the  price  of 
rails  has  been  due  to  improvements  common  to  all  coun- 
tries, to  the  discovery  of  rich  beds  of  iron  ore  on  Lake 
Superior,  and  not  least  to  the  decline  in  the  cost  of  trans- 
porting and  bringing  together  the  coal  and  ore  for  making 
the  Bessemer  iron,  —  factors  not  perceptibly  affected  by 
the  duty. 

Other    reductions  in  the  act  of  1883   may  be  briefly 
noted.     The  duty  on  marble  was  fixed  at  sixty-five  cents 
per  cubic  foot  on  rough  marble,   and   at  $1.10 
per  cubic  foot  on  marble  sawed,  dressed,  and  in 


slabs.     This  was  a  slight  decrease  from  the  com- 
pound duties  discussed  in  the  preceding  chapter.1     The 
duty  on  nickel  was  put  at  fifteen  cents  a  pound,  in  place 
of  the  previous  duty  of  twenty  and  thirty  cents  a  pound. 
Practically  all  the  nickel  imported  had  come  in  at  the  duty 

1  See  p.  224. 


248  HISTORY   OF   THE   EXISTING    TARIFF. 

of  twenty  cents  ;  consequently  the  reduction  was  less 
considerable  than  it  appeared  at  first  sight  to  be.  A 
change  of  greater  importance  was  the  reduction  of  the 
duty  on  silks  from  sixty  to  fifty  per  cent.  In  part,  it  is 
true,  this  was  again  a  merely  nominal  change,  many  silk 
goods  being  as  effectually  kept  out  by  a  duty  of  fifty  per 
cent,  as  by  one  of  sixty.  But  a  large  quantity  of  silks 
were  steadily  imported  ;  on  these,  and  on  goods  of  the 
same  sort  made  in  the  country,  the  lowering  of  the  duty 
meant  a  real  decline  in  the  burden  of  taxation.1  The  re- 
duction of  1883  was  as  great  as  could  have  been  expected, 
and  was  in  marked  contrast  with  the  advances  made  in 
the  duties  on  finer  cotton  and  woollen  goods.  The  same 
contrast  appears  in  the  reduction  of  the  duty  on  finer  linens 
from  forty  to  thirty-five  per  cent.  On  a  considerable 
number  of  other  articles  also  reductions  were  made ;  the 
reductions  being  usually  slight,  yet  sufficient  in  number  to 
indicate  a  disposition  to  concede  something  to  those  who 
called  for  a  curtailment  of  the  protective  duties. 

The  duties  on  a  number  of  agricultural  or  mainly 
agricultural  products,  such  as  beef  and  pork, 

Wheat, 

hams   and  bacon,  lard,  cheese,  butter,  wheat,    corn  etc 
corn,  and  oats  were  left  unchanged  in  the  act  of 
1883.     The  duty  on  barley  was  somewhat  lowered  at  the 
request  of  the  brewers  of  beer ;  and  that  on  rice  also  was 
slightly  reduced.     But  almost  all  of  these  products  were 

r  On  the  silk  manufacture  as  it  then  stood  I  have  said  something  in 
Quarterly  Journal  of  Economics,  vol.  iii.  (1889),  pp.  268—278.  On  some 
changes  in  later  years,  see  F.  R.  Mason,  The  American  Silk  Industry  and 
the  Tariff ^  Publ.  Amer.  Econ.  Assoc.,  vol.  xi.,  No,  4  (1910). 


THE    TARIFF  ACT  OF  1883.  249 

charged  with  the  same  rates  as  in  previous  years.  It  is 
needless  to  say  that  the  duties  on  them  have  no  effect 
whatever,  except  to  an  insignificant  extent  on  the  local 
trade  across  the  Canadian  border.  '  The  duties  were  left 
unchanged  in  order  to  maintain  the  fiction  that  the  agri- 
cultural population  secured  through  them  a  share  of  the 
benefits  of  protection.  The  reductions  in  this  schedule, 
on  barley  and  on  rice,  affected  almost  the  only  products 
on  which  the  duties  in  fact  were  of  any  advantage  to  the 
agricultural  producer  or  of  any  disadvantage  to  the  con- 
sumer. In  this  regard,  as  in  others,  there  was  a  sharp 
contrast  between  the  legislation  of  1883  and  that  which 
followed  it  in  1890  and  1897. 

Enough  has  been  said  of  the  details  of  the  act  of  1883. 
Its  general  character  cannot  be  easily  described  ;  in  truth, 
it  can  hardly  be  said  to  have  any  general  character.  On 
the  whole,  it  may  be  fairly  described  as  a  half-hearted 
attempt  on  the  part  of  those  wishing  to  maintain  a 
system  of  high  protection,  to  make  some  concession  to 
a  public  demand  for  a  more  moderate  tariff  system.1 
Some  duties  were  increased,  some  lowered  ;  nor  was  any 
consistent  policy  followed.  Some  raw  materials,  like 

1  Mr.  John  L.  Hayes,  the  President  of  the  Tariff  Commission,  writing 
more  particularly  of  the  new  duties  on  wool  and  woollens,  said,  shortly  after 
the  passage  of  the  act  :  ' '  Reduction  in  itself  was  by  no  means  desirable  to 
us  ;  it  was  a  concession  to  public  sentiment,  a  bending  of  the  top  and 
branches  to  the  wind  of  public  opinion  to  save  the  trunk  of  the  protective 
system.  In  a  word,  the  object  was  protection  through  reduction.  We  were 
willing  to  concede  only  to  save  the  essentials  both  of  the  wool  and  woollens 
tariff.  *-  *  *  We  wanted  th*  tariff  to  be  made  by  our  friends." — Bui 
letin  Wool  Mf.^  xiii.,  94 


250  HISTORY   OF   THE  EXISTING    TARIFF. 

wool  and  pig-iron,  were  admitted  at  slightly  lower  rates ; 
others,  like  iron  ore,  were  charged  with  higher  rates. 
The  same  incongruities  appear  in  the  duties  on  more 
finished  goods  ;  though  as  to  these  it  may  be  said  that 
the  reductions  were  generally  nominal,  rarely  of  real  effect. 
Looking  at  the  tariff  system  as  a  whole,  it  retained,  sub- 
stantially unchanged,  the  high  level  of  duties  reached 
during  and  after  the  Civil  War.  No  new  line  of  policy 
was  entered  on,  in  one  direction  or  the  other ;  and  it 
remained  for  the  act  of  1890,  the  next  step  in  our  tariff 
history,  to  begin  a  sharp  and  unmistakable  movement  in 
the  direction  of  still  higher  protection.  That  measure  will 
be  the  subject  of  the  next  chapter. 


ft 

CHAPTER  V. 

THE   TARIFF   ACT   OF    1890. 

AFTER  the  passage  of  the  tariff  act  of  1883  ^ew  Per~ 
sons  would  have  expected,  for  a  long  series  of  years,  a 
further  extension  of  the  protective  system.  Neverthe- 
less, a  marked  increase  of  duties  was  made,  within  a  few 
years,  in  the  act  of  ^80,0,  familiarly  known  as  the  McKin- 
ley  tariff  act :  a  measure  which  marks  a  new  phase  in 
our  tariff  history  and  in  the  protective  controversy. 

In  the  years  immediately  succeeding  the  passage  of  the 
act  of  1883,  several  unsuccessful  attempts  were  made  to 
amend  it.1  In  1884,  Mr.  Morrison,  of  Illinois,  introduced 
a  bill  by  which  a  general  reduction  of  twenty  per  cent., 
and  the  entire  remission  of  duties  on  iron  ore,  coal,  lum- 
ber, and  other  articles,  were  proposed.  Mr.  Morrison  may 
have  been  moved  to  advocate  the  plan  of  a  "  horizontal  " 
reduction  by  the  example  which  had  been  set  in  1872  ; 
and  doubtless  he  was  also  influenced  by  the  circumstance 
that  the  protectionists  themselves  had  arranged  the. details 
of  the  act  of  1883,  and  could  not  complain  of  dispro- 
portionate reductions,  or  of  a  disturbance  of  relative  rates, 

1  An  account  of  these  attempts  is  given  by  Mr.  O.  H.  Perry  in  the  Quar- 
terly Journal  of  Economics  for  October,  1887,  vol.  ii.,  pp.  69-79. 

251 


252  HISTORY   OF   THE  EXISTING    TARIFF. 

under  a  plan  which  affected  all  articles  equally.  Never- 
theless, the  proposal  met  with  vehement  opposition  not 
only  from  the  Republicans,  but  from  a  strong  minority  in 
Mr.  Morrison's  own  party.  It  was  disposed  of  on  May  6, 
1884,  by  a  vote  (156  to  151)  striking  out  its  enacting 
clause.  Two  years  later,  in  the  Forty-ninth  Congress,  a 
similar  disposition  was  made  of  another  bill  introduced 
by  Morrison.  The  proposal  of  1886,  however,  was  differ- 
ent from  that  of  1884,  m  tnat  it  made  detailed  changes  in 
the  duties.  Lumber,  salt,  wool,  hemp,  flax,  and  other 
articles  were  put  on  the  free  list ;  the  duty  on  woollens 
was  made  thirty-five  per  cent.,  the  specific  duties  on  wool- 
lens being  removed  with  the  duties  on  wool ;  and  reduc- 
tions were  proposed  on  cottons  and  on  sugar.  The  bill 
never  was  discussed  in  Congress,  for  Mr.  Morrison's 
motion  to  proceed  to  its  consideration  was  defeated  by  a 
vote  of  157  to  140,  and  during  the  rest  of  the  session  no 
further  attempt  was  made  to  take  it  up.  Early  in  the 
next  session,  in  December,  1886,  a  motion  was  again  made 
to  proceed  to  the  consideration  of  revenue  bills,  and  again 
was  defeated.1 

With  the  session  of  1887-88,  however,  the  tariff  con- 
troversy entered  on  a  new  phase.  President  Cleveland's 

1  Some  other  measures  of  less  significance  were  also  introduced  in  these 
years,  such  as  a  bill  of  1884,  to  restore  the  duties  of  1867  on  wool,  which 
was  defeated  by  a  close  vote  of  126  to  119,  and  bills  introduced  by  Messrs. 
Randall  and  Hiscock  in  1886.  Mr.  Randall's  bill  proposed  the  removal  of 
internal  taxes  on  tobacco,  fruit  brandies,  and  spirits  used  in  the  arts,  entire 
remission  of  duties  on  lumber,  jute  butts,  and  a  few  minor  articles,  and  a 
slight  reduction  of  some  other  duties.  Mr.  Hiscock's  bill  proposed  similar 
changes  in  the  internal  taxes,  and  a  large  reduction  of  the  duty  on  sugar, 


THE    TARIFF  ACT  OF   1890.  253 

annual  message  to  Congress,  in  December,  1887,  was  de- 
voted  entirely  to  the  tariff,  and  urged  vigorously  a  general 
reduction  of  duties,  and  more  especially  the  removal  of 
duties  on  raw  materials.  Mr.  Cleveland's  decided  and 
outspoken  attitude  had  the  effect  of  committing  his  party 
unreservedly  to  a  policy  of  opposition  to  the  existing 
protective  system,  and  so  of  making  this  question  more 
distinctly  a  party  matter  than  it  had  been  at  any  time 
since  the  Civil  War.  It  is  true  that  in  the  campaign  of 
1884  the  Republicans  had  put  forward  the  tariff  question 
as  the  main  issue  on  which  they  wished  to  stand  before 
the  country  ;  but  in  that  year  the  personal  qualifications 
of  Mr.  Elaine  for  the  Presidency  played  an  important  part 
in  the  election,  which  therefore  could  not  be  said  to  turn 
simply  on  the  tariff  issue.  Moreover,  within  the  Demo- 
cratic party  there  was  then  an  active  minority  opposed  to 
the  policy  of  tariff  reduction  favored  by  most  of  the 
Democrats.  This  minority  had  been  strong  enough  to 
defeat  Mr.  Morrison's  tariff  bill  of  1884.  On  the  measure 
of  that  year,  while  1 5 1  Democrats  voted  in  the  affirma- 
tive, 41  voted  in  the  negative,  and,  with  the  aid  of  a 
compact  Republican  vote  in  the  negative,  put  an  end  to 
the  bill.  The  strength  of  this  element  in  the  Democratic 
party  had  declined  somewhat  in  later  years  ;  but  in  De- 
cember, 1886,  at  the  opening  of  the  short  session  1886-87, 

with  a  bounty  to  American  sugar-makers.  Both  of  these  bills,  which  indi- 
cated the  manner  in  which  the  protectionists  tried  to  grapple  with  the  problem 
of  reducing  the  revenue,  were  referred  to  the  Committee  of  Ways  and 
Means,  and,  not  being  reported  from  that  body,  never  came  to  a  vote  in  the 
House. 


254  HISTORY  OF  THE  EXISTING   TARIFF. 

26  Democrats  out  of  169  voting  were  still  recorded  in 
opposition  to  the  tariff  reform  measure  then  under  con- 
sideration.1 In  the  new  Congress,  whose  first  session 
opened  with  Mr.  Cleveland's  message  on  the  tariff,  the 
situation  was  changed.  The  Mills  bill,  so-called,  prepared 
during  that  session,  was  passed  by  the  Democrats  in  the 
House  distinctly  as  a  party  measure  ;  out  of  169  Demo- 
crats voting  all  but  four  voted  for  it.  The  Republicans 
were  as  unanimous  in  voting  against  it,  and,  by  way  of 
counter  manifesto,  prepared  in  the  Senate,  where  they  had 
a  majority,  a  bill  for  changing  the  tariff  system  in  the 
direction  of  further  protection.  The  position  of  both  par- 
ties was  in  this  way  sharply  defined,  and  in  the  campaign 
of  1888  the  tariff  question  was  the  issue  squarely  presented. 
Neither  the  Senate  bill  prepared  by  the  Republicans, 
nor  the  Mills  bill  prepared  in  the  House  by  the  Demo- 
crats, was  expected  to  reach  the  stage  of  enactment. 
Both  served  simply  to  give  concrete  expression  to  the 
principles  of  the  two  parties.  The  Mills  bill  reduced  the 
duty  on  pig-iron  to  $6.00  a  ton,  fixed  the  duties  on 
cottons  at  35  or  40  per  cent,  (all  specific  duties  on  cottons 
being  abolished),  and  made  reductions  of  a  similar  sort, 
not  often  great  in  themselves,  but  significant  in  principle, 
on  other  manufactures.  The  incisive  changes  were  on 
raw  materials.  Hemp,  flax,  lumber  were  to  be  admitted 
free.  Most  important  of  all,  wool  was  put  on  the  free 

1  Tables  on  the  votes,  by  States,  on  the  bills  considered  between  1883  and 
1887  will  be  found  in  Mr.  Perry's  article  in  the  Quarterly  Journal  of  Eco- 
nomics, just  referred  to. 


THE   TARIFF  ACT  OF  1890. 

list ;  a  change  naturally  accompanied  by  the  proposal  to 
abolish  the  specific  or  compensating  duties  on  woollen 
goods.  The  Senate  bill,  on  the^.  other  hand,  proposed 
distinctly  a  further  extension  of  the  protective  system. 
A  considerable  number  of  duties  were  raised,  especially 
on  manufactures  of  which  imports  continued  in  large 
volume,  like  finer  cottons  and  woollens.  On  a  few 
articles  concessions  were  made,  as  in  the  free  admission 
of  jute,  and  a  small  reduction  of  the  duty  on  steel  rails. 
In  the  crucial  case  of  wool,  the  Senate  bill  provided  for  a 
slight  increase  above  the  rates  of  1883,  both  on  clothing 
and  carpet  wools,  and  for  a  corresponding  advance  in  the 
specific  duties  on  woollens ;  these  changes  being  accom- 
panied in  some  cases  by  an  increase  in  the  ad-valorem 
duties  on  these  goods. 

The  victory  of  the  Republicans  in  1888,  and  the  election 
of  President  Harrison,  were  the  results  of  the  issue  thus 
placed  before  the  voters.  The  election  was  won  by  a 
narrow  margin,  and  was  affected  by  certain  factors  which 
stood  apart  from  the  main  issue.  The  independent 
voters  had  been  disappointed  with  some  phases  of  Presi- 
dent Cleveland's  administration  of  the  civil  service,  and 
many  who  had  voted  for  him  in  1884,  did  not  do  so  in 
1888.  In  New  York,  whose  vote  was  practically  decisive, 
political  intrigues  helped  to  turn  the  scale.  On  the  whole, 
however,  the  Republicans  held  their  own,  and  even  made 
gains,  throughout  the  country,  on  the  tariff  issue ;  and 
they  might  fairly  consider  the  result  a  popular  verdict  in 
favor  of  the  system  of  protection.  But  their  opposition 


256  HISTORY  OF  THE  EXISTING    TARIFF. 

to  the  policy  of  lower  duties,  emphasized  by  President 
Cleveland,  had  led  them  not  only  to  champion  the  exist- 
ing system,  but  to  advocate  its  further  extension,  by  an 
increase  of  duties  in  various  directions.  This  they  had 
proposed  in  the  Senate  bill  of  1888,  and  had  pledged 
themselves  to  effect  in  the  debates  of  the  campaign.  Ac- 
cordingly when  the  Congress  then  elected  met  for  the 
session  of  1889-90,  the  Republican  majority  in  the  House 
proceeded  to  pass  a  measure  which  finally  became  the 
tariff  act  of  1890.  This  measure  may  fairly  be  said  to  be 
the  direct  result  of  Mr.  Cleveland's  tariff  message  of  1887. 
The  Republicans,  in  resisting  the  doctrine  of  that  message, 
were  led  by  logical  necessity  to  the  opposite  doctrine  of 
higher  duties,  and  felt  compelled,  for  the  sake  of  party 
consistency  and  political  prestige,  to  pass  a  tariff  measure 
of  some  sort.  Notwithstanding  grave  misgivings  on  the 
part  of  some  of  their  leaders,  especially  those  from  the 
northwest,  the  act  known  popularly  as  the  McKinley  bill 
was  pushed  through  after  long  and  wearisome  debates, 
and  finally  became  law  in  October,  1890.  To  some  of 
the  details  of  this  important  measure  we  may  now  turn.1 

The  wool  and  woollens  schedule  had  become  the  most 
important  and  most  sharply  debated  part  of  the  tariff 
system,  and  the  changes  made  in  it  by  the  act  of  1890 
deserve  careful  attention.  On  wool,  the  division  into 
three  classes,  clothing,  combing,  and  carpet  wool,  was 

1  An  excellent  account  of  the  legislative  history  of  the  act  of  1890,  and 
also  of  the  acts  of  1894  and  1897,  is  given  in  Stanwood's  American  Tariff 
Controversy ;  vol.  ii.,  chapters  16,  17,  18. 


THE    TARIFF  ACT  OF  1890.  257 

retained,  and  the  changes  in  duty  were  in  the  main  signifi- 
cant from  their  direction  rather  than  from  their  amount. 
The  duties  on  clothing  and  combing  wool,  it  will  be 
remembered,  had  been  slightly  lowered  in  1883  ;  they  were 
slightly  raised  in  1890.  That  on  clothing  wool  went  up  from 
ten  to  eleven  cents  per  pound  ;  on  combing  wool  from 
ten  to  twelve  cents.  The  change  was  meant  to  put  the 
wool  duties  where  they  had  been  before  1883,  an<^  to 
placate  certain  malcontents  who  ascribed  a  fall  in  the 
price  of  wool  to  the  reduction  of  duty  of  that  year.  The 
decline  in  price  was  undoubtedly  due  to  other  causes,  and 
indeed  was  much  greater  than  could  have  been  accounted 
for  by  the  slight  reduction  of  1883  ;  while  the  change  in 
duty  in  1890  was  too  small  to  have  any  serious  effect 
beyond  emphasizing  the  determination  of  the  Republi- 
cans to  yield  nothing  on  this  part  of  the  protective  system. 
So  far  as  the  difference  in  rate  between  clothing  and 
combing  wool  goes  (eleven  cents  on  the  one,  twelve  on 
the  other),  it  is  difficult  to  see  what  was  gained.  The 
distinction  between  the  two  classes  is  largely  nominal, 
many  kinds  of  wool  being  available  either  for  carding  or 
for  combing,  and  the  difference  in  the  duties  was  in  any 
case  too  slight  to  have  any  appreciable  effect.  Appar- 
ently, it  served  simply  to  cause  needless  complication  in 
administering  the  collection  of  duties. 

On  carpet  wools,  a  more  radical  change  was  adopted, 
more  radical  at  least  in  form.  As  has  been  observed 
elsewhere,  the  conditions  in  regard  to  carpet  wool  are 
peculiar.  Practically  no  wool  of  this  grade  is  grown  in 


258  HISTORY  OF   THE  EXISTING   TARIFF. 

the  United  States.  It  is  of  a  coarse  quality  grown  mainly 
in  countries  like  Asia  Minor,  India,  Russia,  and  the  Ar- 
gentine Republic,  from  which  it  is  imported  into  the 
United  States  in  large  quantities.  The  reason  why  it  is 
not  grown  in  advanced  communities  like  the  United 
States,  Australia,  England,  France,  Germany,  is  very 
simple.  With  the  same  labor  and  attention  required  for 
carpet  wool,  the  grower  in  civilized  communities,  by  care 
and  intelligence  in  the  breeding  and  management  of  sheep, 
can  secure  a  better  quality  of  wool,  commanding  a  higher 
price ;  accordingly  he  confines  himself  to  the  more  profit- 
able sorts.  The  demand  for  an  increase  in  the  duty  on 
carpet  wool  was  based  on  a  suspicion  that  wool,  properly 
belonging  to  the  clothing  or  combing  class,  had  been  en- 
tered as  carpet  wool,  and  so  had  escaped  the  higher  duty. 
Probably  some  part  of  the  imported  carpet  wool  is  in 
fact  used  in  making  cloths ;  but  the  fraction  is  small,  and 
can  have  no  appreciable  effect  on  the  price  of  domestic 
clothing  wool.  The  endeavor  to  increase  the  duty  natu- 
rally was  opposed  by  the  carpet  manufacturers,  and  led 
to  an  acrimonious  discussion  in  the  committee-rooms  be- 
tween them  and  the  advocates  of  the  supposed  interests 
of  the  farmers.  The  result  in  the  McKinley  act  was  a 
compromise.  The  carpet-wool  duty  was  made  ad  valo- 
rem instead  of  specific,  varying  from  thirty-two  per  cent, 
to  fifty  per  cent.;  the  change  to  the  ad-valorem  method 
being  intended  to  make  the  duty  adjust  itself  automati- 
cally to  the  quality  and  value  of  the  wool.1  Obviously 

1  The  change  in  duty  is  most  easily  explained  by  putting  together  lh» 
rates  under  the  acts  of  1883  and  1800. 


THE    TARIFF  ACT  OF  1890.  259 

the  cnange  in  one  respect  was  objectionable :  it  brought 
with  it  the  temptations  to  fraud  and  undervaluation  which 
are  inevitable  under  ad-valorem  ^duties.  With  it  there 
went  some  other  provisions  which  made  the  new  duties 
more  rigorous  than  they  seem  to  be  on  their  face.  Thus, 
if  any  carpet  wool  should  be  improved  at  all  by  an  ad- 
mixture of  merino  or  English  blood,  it  became  dutiable 
as  clothing  or  combing  wool.  If  any  bale  stated  by  the 
importer  to  be  dutiable  under  one  class,  contained  any 
wool  of  another  class,  the  whole  bale  was  dutiable  at  the 
highest  rate.  If  any  wool  had  been  sorted  or  increased 
in  value  by  the  rejection  of  any  part  of  the  original  fleece, 
it  was  subject  to  double  duty.  Some  of  these  provisions 
were  framed  in  ambiguous  language,  giving  occasion  for 
troublesome  litigation  and  uncertainty  as  to  the  real  effect 
of  the  legislation.  But  all  were  objectionable  to  those 
who  imported  and  used  carpet  wool,  and  emphasized  the 
policy  of  keeping  that  article  within  the  protective  sys- 
tem. Yet  if  there  is  any  article  as  to  which  that  system 
does  not  attain  its  object,  it  is  carpet  wool.  None  is 
grown  in  the  country,  and  none  is  likely  to  be ;  it  is  a 
raw  material  for  an  important  manufacture  ;  its  free  ad- 
mission would  harm  no  vested  interest. 

Turning  now  to  the  duties  on  manufactures  of  wool, 

In  1883  carpet  wool, 
if  worth  12  cents  or  less  per  pound,  paid  2>£  cents. 

••         more  than  12  cents,    "  5          " 

In  1 890  carpet  wool, 

if  worth  13  cents  or  less  per  pound,  paid  32  per  cent,  ad  valorem. 

"          more  than  13  cents,     "  50       "  "         ** 

Most  carpet  wool  is  worth  ten  cents  a  pound  or  more  ;  consequently  th<? 
*J5w  ad-valorem  rates  meant,  in  almost  aliases,  an  increase  on  the  duty. 


260 


HISTORY  OF  THE  EXISTING    TARIFF. 


we  find  a  further  development  in  the  direction  taken  in 
1883;  namely,  a  development  toward  greater  complica- 
tions in  the  already  complicated  scheme  of  duties  built  up 
in  the  act  of  1867.  It  will  be  remembered  that  in  1883 
the  duty  on  woollen  cloths  proper,  the  central  point  in  the 
wool  and  woollens  schedule,  had  been  changed  from  the 
uniform  rate  fixed  in  1867  to  rates  varying  with  the  value 
of  the  goods.  In  the  act  of  1890  the  policy  of  varying 
rates  was  advanced  still  further.  The  mode  in  which 
these  duties  developed  cannot  be  better  exhibited  than 
in  tabular  form,  thus : 


DUTIES   ON   WOOLLEN   CLOTHS. 


IN    1867, 

50  cents  per  lb.,  plus  35 
per  cent. 


IN  1883, 

(1)  If  worth  80  cents  or 
less  per  lb.,  35  cents 
per  lb.,    plus  35   per 
cent. 

(2)  If  worth  more  than 
80   cents   per  lb.,  35 
cents  per  lb.,  plus  40 
per  cent. 


IN  1890. 

(1)  If  worth  30  cents  or 
less  per  pound,  33  cents 
per  lb.  plus  40  per  cent. 

(2)  If  worth  between  30 
and  40  cents  per  lb., 
38^  cents  per  lb.,    plus 
40  per  cent. 

(3)  If  worth  more  than  40 
cents  per  lb.,  44  cents 
per  lb.,   plus    50    per 
cent. 


It  will  be  seen  that  the  act  of  1890  reduced  slightly  the 
specific  duty  on  the  cheapest  woollens,  those  costing  30 
cents  or  less  per  pound.  This  is  another  tacit  admission, 
similar  to  that  made  in  the  act  of  1883,  that  on  cheap  goods 
the  old  compensating  duty  had  been  excessive.  The 
ad-valorem  rate  on  these  goods  was  raised  to  forty  per  cent. 
No  pretence  was  now  made  of  limiting  the  net  protection 
supposed  to  be  given  by  the  ad-valorem  duty,  to  that  mod- 


*  THE    TARIFF  ACT  OF  1890.  261 

crate  rate  of  twenty-five  per  cent,  which  had  been  the  nom- 
inal object  of  the  original  compound  scheme  of  1867.  On 
the  second  class  of  goods,  costing  between  30  and  40  cents 
a  pound,  there  was  an  increase  over  the  rates  of  1883  both 
in  the  specific  and  in  the  ad-valorem  duties.  Finally,  on 
the  third  class  under  the  new  act,  woollens  costing  over 
40  cents,  the  increase  in  duties  was  marked  :  the  specific 
duty  was  44  cents  a  pound,  and  the  ad-valorem  duty  went 
up  to  fifty  per  cent.  On  ready-made  clothing  the  duties 
were  higher  still,  being  fixed  at  49^-  cents  a  pound,  plus 
sixty  per  cent. 

There  are  two  features  in  this  rearrangement  of  the 
duties  on  woollens  which  call  for  comment.  In  the  first 
place,  the  compensating  duty  on  the  cheaper  goods  was 
on  the  face  of  it  made  excessive.  Thus,  on  goods  valued 
at  between  30  and  40  cents  a  pound  the  compensating 
duty  was  fixed  at  38^  cents.  The  compensation  was  sim- 
ply for  the  rise  in  the  price  of  wool  used  by  the  American 
manufacturers,  due  to  our  duty  on  imported  wool.  This 
extra  expense  to  the  domestic  manufacturer,  in  the  higher 
price  of  wool,  was  assumed,  by  the  terms  of  the  act,  to  be 
as  great  as  the  total  cost  of  making  the  same  woollen 
goods  for  the  foreign  manufacturer, — wool,  wages,  and 
everything  else.  But  the  foreign  goods  were  valued  at 
between  30  and  40  cents  a  pound,  which  means  that  they 
cost  about  so  much  ;  while  the  duty  which  compensated 
the  American  producer  was  38^  cents  a  pound.  As  will 
be  presently  explained,  this  extraordinary  compensating 
duty  was  more  nominal  than  reaL  since  no  classes  of 


262  HISTORY  OF   THE  EXISTING    TARIFF. 

goods  to  which  it  would  apply  are  likely  to  be  imported. 
But  it  was  none  the  less  an  anomaly. 

The  second  feature  to  be  noted  is  connected  with  the 
first.  It  is  the  new  dividing  point  in  the  valuation  and 
classification  of  woollen  cloths  :  the  maximum  duty  being 
no  longer  on  goods  worth  over  80  cents  per  pound,  but 
on  goods  worth  over  40  cents.  The  change  obviously 
served  to  increase  the  duties  more  than  would  appear  at 
first  sight ;  since  goods  worth  between  40  and  80  cents 
now  paid  not  the  lowest,  but  the  highest  duty.  The  ef- 
fect of  the  new  classification  in  fact  was  that  all  cloths 
imported  must  pay  the  highest  rate.  The  imports  of 
woollens  are  chiefly  of  the  finer  qualities.  When  the 
act  of  1883  was  passed,  it  was  probably  expected  that 
few  woollens  of  the  lower  class  then  provided  for  (namely, 
those  worth  less  than  80  cents  per  pound)  would  be  im- 
ported. In  the  first  years  after  1883,  this  was  the  case. 
But  as  time  went  on,  a  growing  proportion  of  woollens 
came  in  at  the  lower  value  and  the  correspondingly  lower 
duty  ;  until  in  1889  a  good  part  of  the  cloths  imported 
were  classified  at  the  lower  rate.  This  unexpected  devel- 
opment was  due  partly  to  a  decline  in  the  price  of  wool 
after  1883  ;  partly  to  improvements  in  manufacturing  which 
made  it  possible  to  produce  goods  more  cheaply  ;  and 
partly,  no  doubt,  to  the  temptation  to  make  goods,  and 
perhaps  also  undervalue  them  at  the  custom-house,  in 
such  manner  as  to  bring  them  in  at  the  lower  rate  of  duty. 
At  all  events,  the  act  of  1890  was  so  arranged  as  to  put 
an  end  to  this  importation  of  woollens  at  the  lower  end 
of  the  schedule.  To  *Ui  ioteuta*  and  purposes  it  has  made 


THE   TARIFF  ACT  OF  1890. 


263 


all  woollen  goods  likely  to  be  imported  at  all,  subject  to 
the  maximum  rate  of  duty.1 

Next  we  may  consider  the  duties  on  women's  and 
children's  dress  goods.  The  duties 'on  these  had  already 
been  raised  in  1883  above  the  rates  of  1867;  in  1890  they 
were  further  raised.  As  in  the  case  of  cloths  for  men's 
wear,  the  increase  took  place  partly  by  direct  advance  in 
the  rates,  partly  by  a  shifting  of  the  classification.  The 
compensating  duty  on  these  goods,  it  will  be  remembered, 
had  been  from  the  first  arranged  by  the  yard,  and  not  by 
the  pound.  The  changes  in  duty  can  again  be  best  pre- 
sented in  tabular  form. 


DUTIES  ON   DRESS  GOODS. 


IN    1883. 

(1)  Worth  20  cents  a  yard  or  less : 

duty,  5  cents  a  yard,  plus  35 
per  cent. 

(2)  Worth  over  20  cents  a    yard  : 

duty,  7  cents  a  yard,  plus  40 
per  cent. 

(3)  Made  wholly  of  wool :   duty,    9 

cents    a   yard,    plus    40   per 
cent. 


IN  1890. 

(1)  Cotton  warp,  worth  15  cents  a 

yard  or  less  :  duty,   7  cents  a 
yard,  plus  40  per  cent. 

(2)  Cotton     warp,     worth   over     15 

cents  a  yard  :  duty,  8  cents   a 
yard,  plus  50  per  cent. 

(3)  If  the  warp  contains  any  wool : 

duty,  12  cents  a  yard,  plus  50 
per  cent. 


1  The  imports  of  woollen  cloths  during  the  period  in  which  the  act  of  1883 
was  in  force  were  as  follows  (the  figures  denote  thousands  of  dollars)  : 


Fiscal  Year  1884, 
1885, 
1886, 
1887, 
1888, 

TQQ~ 


During  that  part  of  the  fiscal  year  1890-91,  when  the  duties  of  the  act   of 
1890  were  in  force,  the  imports  of  >v.aolj*n  cloths  were, 


Worth  80  cents  or 

Worth  over 

less. 

80  cents. 

$243,OOO 
213,000 

$12,974,000 
9,867,000 

314,000 

9,151,000 

713,000 
1,073,000 
I,I25,OOO 

9,309,000 

9,778,000 
8,133,000 

264  HISTORY  OF   THE  EXISTING   TARIFF. 

The  specific  duty  on  the  lowest  class  went  from  5  cents 
to  7;  the  ad-valorem  duty  from  35  to  40  per  cent.  In 
the  middle  class  the  rates  advanced  from  7  to  8  cents,  and 
from  40  to  50  per  cent.  The  line  of  division  by  value  went 
down  from  20  to  15  cents,  so  that  a  larger  proportion  of 
the  goods  come  in  under  the  middle  duty  of  8  cents  plus 
50  per  cent.  On  the  third  class,  the  rates  went  up 
in  similar  proportions, — from  9  to  12  cents,  and  from  40 
to  50  per  cent.  One  other  effective  change  was  made, 
indicated  in  the  tabular  statement,  but  deserving  more 
detailed  description.  In  1883  the  third  class,  in  which 
the  duties  were  highest,  included  goods  made  wholly  of 
wool,  and  these  only.  In  1890,  certain  goods  of  mixed 
materials  were  transferred  to  it.  The  first  two  classes 
included,  in  1890,  fabrics  "of  which  the  warp  consists 
wholly  of  cotton  or  other  vegetable  material."  Conse- 
quently the  third  class  included  such  as  have  a  warp 
containing  any  fraction  of  wool ;  and  these  mixed  goods, 
as  well  as  goods  made  entirely  of  wool,  become  subject 
to  the  new  maximum  duty  of  12  cents  per  yard,  plus  50 
per  cent. 

The  changes  on  dress  goods  were  undoubtedly  those  of 
greatest  practical  effect  in  the  wool  and  woollens  schedule. 

(1)  valued  at  30  cents  or  less  per  pound  ....  $1,248 

(2)  valued  at  between  30  and  40  cents 49,925 

(3)  valued  at  over  40  cents   .  6,303,500 

Practically  all  were  valued  at  over  40  cents,  and  so  paid  the  maximum 

rate  of  44  cents  per  pound,  plus  50  per  cent.  Reduced  to  an  ad-valorem 
equivalent,  this  was  a  duty  of  about  92  per  cent.  On  the  few  goods  of 
the  second  class  imported  (worth  between  30  and  40  cents)  the  duty  was 
143  per  cent. 


THE    TARIFF  ACT  OF  1890.  265 

The  importation  of  these  goods  into  the  United  States 
was  enormous :  having  ranged  between  fifteen  and  twenty 
millions  of  dollars'  worth  annually  in  the  years  since  the 
act  of  1883.  It  was  natural  that  those  who  held  to  the 
principle  of  protection  should  endeavor  to  check  them. 
There  had  been  a  tendency,  similar  to  that  noted  in  the 
case  of  woollen  cloths,  though  not  so  marked,  for  a  grow- 
ing importation  of  the  cheaper  goods  (valued  at  less  than 
20  cents  a  yard  under  the  act  of  1883)  >  and  this  con- 
tributed to  the  change  in  valuation  and  description  in  the 
new  act.  By  the  act  of  1890,  these  fabrics  were  subjected 
in  almost  all  cases  to  the  maximum  duty,  equivalent  to 
over  one  hundred  per  cent,  on  their  foreign  value.1  It 
was  surprising  that  imports  continued  in  face  of  a  duty  so 
very  high  ;  yet  continue  they  did,  indicating  that  not  only 
the  imported  fabrics,  but  the  domestic  fabrics  of  the  same 
sorts,  were  raised  in  price  for  the  consumer  by  the  full 
extent  of  the  duty.  The  explanation  of  the  steady  inflow 
of  these  goods,  and  the  inability  of  the  American  manu- 

1  In  that  part  of  the  fiscal  year  1890-91  in  which  the  new  duties  were  in 
force,  the  imports  of  the  three  classes  of  dress  goods  were  : 

(1)  valued  at  15  cents  or  less  (duty  7  cents  plus  40  per  cent.)  $768,000 

(2)  valued  at  more  than  15  cents  (duty  8  cents  plus  50  per  cent.)         845,000 

(3)  if  the  warp  contains  any  wool  (duty  1 2  cents  plus  50  per  cent.)  $5,281,000 
On  goods  of  the  third  class,  the  duties  collected  were  $5,423,000,  making 

103  per  cent,  of  their  value. 

It  should  be  noted  that  dress  goods  exceeding  a  certain  weight  (four 
ounces  a  square  yard)  are  treated  like  men's  woollens  and  are  subjected  to  the 
maximum  duty  on  these, — 44  cents  a  pound  plus  50  per  cent. 

For  a  statement  of  the  grounds  from  the  protectionist  point  of  view,  for 
these  very  high  duties,  see  an  article  by  Mr.  William  Whitman,  in  the 
Bulletin  of  the  Wool  Manufacturers,  vol.  xx.,  pp.  283-304. 


266  HISTORY  OF   THE  EXISTING    TARIFF. 

facturers  to  supplant  them,  is  probably  to  be  found  largely 
in  the  peculiarities  of  their  manufacture,  and  the  difficulty 
of  adapting  it  to  American  conditions.  Of  course,  with 
duties  high  enough,  anything  can  be  made  in  the  United 
States;  and  the  higher  duties  of  1890,  increased  still  fur- 
ther as  they  were  in  1897,  served  to  stimulate  effectively 
the  manufacture  of  fine  woollens  and  dress  goods. 

In  other  parts  of  the  wool  and  woollens  schedule  there 
were  similar  changes.  Some  of  the  higher  duties  were 
merely  nominal.  Thus  the  duty  on  ingrain  carpets,  which 
had  been  12  cents  a  yard  plus  30  per  cent,  in  1883,  went 
up  to  19  cents  plus  40  per  cent. ;  that  on  Brussels  carpets, 
from  30  cents  plus  30  per  cent,  to  44  cents  plus  40  per 
cent.  The  duty  on  these  had  been  prohibitory  before  ; 
the  changes  served  simply  to  make  them  more  prohibitory, 
and  were  of  no  practical  effect  whatsoever.  Other  changes 
were,  like  the  higher  duties  on  dress  goods,  of  real  im- 
portance, such  as  the  increase  in  the  duties  on  knit  goods 
and  underwear.  Of  these  the  imports  also  were  consider- 
able, and  a  change  in  duties  consequently  had  a  material 
effect  on  industry  and  prices.  The  patience  of  the  reader 
would  be  needlessly  taxed  by  a  further  consideration  of 
these  details.  Enough  has  been  said  to  indicate  the 
character  of  the  wool  and  woollens  schedule  of  the  act  of 
1890  ;  we  may  pass  to  other  parts  of  the  measure. 

Among  textiles  cotton  goods  come  next  in  importance 
to  woollens  in  our  tariff  system.  On  the  cheaper  grades 
of  cotton  cloths,  the  duties,  which  had  already  been 
reduced  in  1883,  were  still  further  lowered.  Thus,  on 


THE    TARIFF  ACT  OF  1890.  26/ 

the  cheapest  grade  of  unbleached  cottons,  the  duty 
decreased  from  2|  to  2  cents  a  yard.  These,  however, 
are  goods  which  are  manufacture^  in  the  United  States 
as  cheaply  as  in  foreign  countries,  and  which  we  are  more 
likely  to  export  than  import.  The  duties  were  and  are 
nominal,  and  the  change  went  no  further  than  a  revision 
of  certain  unimportant  figures  in  the  statutes.  On  goods 
whose  importation  had  continued  under  the  act  of  1883, 
and  on  which  the  duties  had  been  of  real  importance,  the 
changes  were  in  the  other  direction.  On  the  highest 
grade  of  cotton  prints,  the  duty  went  up  from  6  to  6| 
cents  a  yard  ;  with  the  further  proviso  that  goods  valued 
at  over  15  cents  a  yard,  on  which  the  duty  had  before 
been  40  per  cent.,  now  became  subject  to  one  of  45 
per  cent.  In  the  drag-net  clause,  fixing  the  duty  on 
cotton  manufactures  not  elsewhere  provided  for,  the  old 
rate  of  35  per  cent,  was  replaced  with  one  of  50  per 
cent.  Some  duties  were  changed  from  ad-valorem  to 
specific  with  the  effect  of  raising  them  materially.  Thus, 
on  cotton  cords  and  braids,  the  former  rate  of  35  per 
cent,  became  one  of  35  cents  per  pound,  equivalent  to 
about  60  per  cent.  The  most  striking  change,  however, 
was  in  the  case  of  knit  goods  and  stockings.  On  cotton 
stockings,  the  act  of  1883  had  collected  a  uniform  rate 
of  40  per  cent.  This  was  replaced  in  1890  by  a  com- 
plicated system  of  graded  duties,  partly  specific  and 
partly  ad-valorem,  and  varying  with  the  assessed  value 
of  the  goods.  The  new  rates  can  again  be  best  described 
by  a  statement  in  tabular  form : 


268  HISTORY  OF  THE  EXISTING  TARIFF. 

If  the  value  is  6oc.  or  less  a  dozen,  the  duty  is  2oc.  a  dozen,  plus  20  per  *t 
"    betw.  6oc.    &f2.oo""    "     "      500.   •     "  "    30"     " 

"     betw.  $2.00 "  $4.00  "       "~    "      750.         "  "    40"     4« 

"     over  $4.00  "       "     "    $1.00       ••  "     40  ••     " 

Knit  goods  of  cotton,  and  more  particularly  cotton 
stockings,  are  imported  in  large  amounts,  the  annual 
value  of  the  imports  having  been  hitherto  between  six 
and  eight  millions.  Most  of  these  were  of  the  second 
class  in  the  schedule  just  given,  dutiable  at  50  cents  a  dozen 
plus  30  per  cent., — equivalent,  on  the  average,  to  about 
70  per  cent,  on  the  value.  The  raw  material  here  is 
cheaper  in  the  United  States  than  abroad,  and  it  is  sur- 
prising that  so  heavy  a  duty  should  have  been  considered 
necessary  to  encourage  the  domestic  manufacture.  The 
explanation  of  the  continued  large  imports  is  apparently 
to  be  found  in  part  in  a  great  advance  in  foreign  methods 
of  production,  due  to  the  newly  invented  or  newly  im- 
proved machinery,  the  use  of  which  has  not  yet  been  in- 
troduced into  this  country.  In  part  the  explanation  lies 
doubtless  in  the  fact  that  the  finer  cotton  stockings  are 
made  on  knitting  frames  with  a  large  use  of  hand  labor. 
At  all  events,  the  changes  just  noted  present  as  extreme 
a  case  of  the  application  of  protection  as  is  to  be  found  in 
our  legislation. 

On  linen  goods,  of  which  only  the  coarsest  qualities 
have  been  made  in  the  country,  the  finer  being  all 
obtained  by  importation,  the  duty  went  up  from  35  to 
50  per  cent.  Linen  laces  and  embroideries  were  ad- 
vanced from  30  to  60  per  cent.  On  silks  the  general 
duty  remained  as  before,  at  50  per  cent. ;  on  silk  laces 


THE   TARIFF  ACT  OF  1890.  269 

and  embroideries  it  went  up  to  60  per  cent.  Plush 
goods  of  all  sorts,  whether  made  of  silk,  cotton,  or  wool, 
were  subjected  to  very  high  rates./,^.  complicated  scheme 
of  duties  was  adopted,  partly  specific  and  partly  ad-va- 
lorem, and  varying  with, the  value  of  the  goods  ;  the  system 
being  similar  in  its  construction  to  that  already  described 
as  to  cotton  hose,  and  bringing  about  duties  of  60  and 
70  per  cent,  on  the'  'value.  The  imports  of  velvets, 
plushes,  and  similar  goods,  were  heavy,  and  the  domestic 
production  was-inconsiderable  ;  the  rates  stood  for  another 
determined  effort  to  establish  a  new  manufacture  under 
the  shelter  of  very  high  duties.1 

One  general  characteristic  of  the  McKinley  act  may 
here  be  discussed.  It  was  the  great  development  of  the 
method  of  minimum  valuations  and  minimum  duties 
substantially  similar  to  that  adopted  in  the  tariff  act  of 
1828.  This  mode  of  grading  the  duties  was  adopted  not 
only  in  the  cases  described  in  the  preceding  pages — woollen 
cloths,  dress  goods,  cotton  stockings,  velvets  and  plushes — 
but  in  other  cases  also,  such  as  blankets  and  flannels,  boiler 
and  plate  iron,  penknives  and  table-knives,  shotguns,  and 
pistols.2  On  some  of  these  articles  the  minimum  system  had 
already  been  adopted  in  earlier  acts  ;  on  others  it  was  newly 
adopted  in  1890.  The  object  apparently  was  to  avoid  an 
ad-valorem  duty,  and  yet  to  secure  an  adaptation  of  the  rate 
of  duty  to  the  value  of  the  article.  But,  in  doing  this 

1  The  provisions  as  to  velvets  and  similar  fabrics  are  in  sections  350  and 
411  of  the  act. 
*  See  sections  138,  165,  167,  170,  393. 


2/O  HISTORY  OF   THE  EXISTING    TARIFF. 

the  fundamental  difficulty  of  ad-valorem  duties — the 
temptation  to  undervaluation — is  met,  as  was  pointed  out 
in  the  discussion  of  the  act  of  1828,  in  aggravated 
form.1  The  foreign  manufacturer  is  tempted  to  make 
goods  so  as  to  bring  their  value  near  the  minimum  points, 
and  the  importer  is  tempted  to  undervalue  them.  No 
doubt  another  object  sought  in  the  minimum  system,  in 
1890  as  in  1828,  was  to  conceal  the  real  extent  and  weight 
of  the  duties  imposed  :  a  result  the  more  likely  to  be  at- 
tained where  the  duties  are  not  only  graded  by  valuation, 
but  are  also  mixed  specific  and  ad-valorem  duties. 

The  duties  on  iron  and  steel  would  have  been  thought,  in 
1870,  and  even  in  1880,  the  most  important  parts  of  the 
protective  system.  But  in  recent  years  the  enormous  de- 
velopment of  the  iron  industry  in  the  heart  of  the  country 
has  materially  changed  the  situation.  The  bulk  of  the  iron 
in  the  country  is  now  made  of  ore  mined  on  the  shore  of 
Lake  Superior,  smelted  with  bituminous  coal  mined  west 
of  the  Appalachian  chain.  Pennsylvania  also  contributes 
its  ore,  and  there  has  been  a  striking  development  of  iron- 
making  in  the  South.  Iron  smelted  with  anthracite  coal, 
which  played  so  important  a  part  in  our  industrial  history 
in  the  period  from  1850  to  1870,  has  wellnigh  disappeared.  * 
Most  of  the  production  now  takes  place  far  from  the  sea- 
board, and  the  greater  part  of  the  producers  of  pig-iron 
can  disregard  foreign  competition.  A  lowering  of  the  duty 

1  See  pp.  93,  103,  above. 

2  Compare  what  is  said  below,  at  pp.  299-302,  and  the  references  there 
given,  as  to  the  recent  history  of  the  iron  manufacture. 


THE    TARIFF  ACT  OF  1890.  2/1 

on  pig-iron  to  $6.00,  the  rate  which  was  proposed  in  the 
Mills  bill  of  1888,  would  have  had  no  appreciable  effect 
in  any  quarter.  The  effect  of  a  complete  abolition  of  the 
duty  would  be  confined  mainly  to  the  sea-board  districts. 
These  are  for  all  practical  purposes  nearer  to  England  than 
they  are  to  the  central  States,  which  are  now  the  seat  of 
the  greatest  domestic  production  of  iron.  In  the  McKin- 
ley  act,  no  change  in  the  duty  on  pig-iron  was  proposed, 
and  it  remained  at  the  old  rate,  $6.72  a  ton. 

The  situation  is  much  the  same  in  regard  to  iron  ore. 
The  duty  on  ore  is  significant  only  in  regard  to  those 
grades  which  contain  little  phosphorus,  and  are  therefore 
available  for  the  making  of  steel  by  the  Bessemer  process. 
The  great  rich  beds  of  Bessemer  ore  on  the  shore  of  Lake 
Superior,  having  easy  water  communication  with  the 
heart  of  the  country,  can  supply  the  larger  part  of  the 
smelters  more  cheaply  than  foreign  ore  could.  This  ore 
has  made  its  way  far  to  the  eastward,  and  has  been  used 
by  establishments  very  near  the  sea-board,  which,  but  for 
the  duty,  would  be  likely  to  use  more  or  less  of  foreign  ore. 
The  eastern  establishments  which  make  steel  must  get  their 
Bessemer  ore  either  by  long  railway  haul  from  the  West, 
or  by  importing  it  subject  to  duty.  Large  works  have 
already  been  established  on  the  Atlantic  coast,  using  ore 
from  rich  deposits  in  Cuba,  and  therefore  desirous  of 
getting  ore  free.1  Notwithstanding  a  strong  endeavor 
from  these  producers  to  secure  a  remission  of  the  duty,  it 

1  In  later  years,  not  only  Bessemer  ores,  but  others  also,  have  become 
important  among  the  Cuban  deposits. 


272  HISTORY  OF   THE  EXISTING    TARIFF. 

remained  in  the  McKinley  act  at  the  old  rate,  seventy-five 
cents  a  ton. 

On  steel  rails  the  duty  was  reduced  to  six-tenths  of  a 
cent  a  pound,  or  $13.44  a  gross  ton.  This  reduction  was 
of  the  same  sort  as  that  made  in  1883  :  it  left  the  duty 
still  at  a  prohibitory  rate.  The  steady  advance  in  the  iron 
and  steel  manufacture  in  the  United  States,  the  growth  of 
the  West,  the  discovery  of  rich  sources  of  iron  and  coal, 
above  all,  the  enormous  decline  in  the  cost  of  bringing 
these  materials  together,  due  to  the  cheapening  of  rail- 
way rates,  reduced  the  price  of  steel  rails  as  well  as  of 
other  manufactures  of  iron.  As  the  figures  given  in  the 
Appendix  show,  the  price  still  remained  higher  in  the 
United  States  than  in  England.  But  cost  of  transportation 
from  the  sea-board  to  the  interior  is  such  that  even  in  the 
absence  of  the  duty,  steel  rails  would  be  imported  only 
to  supply  railways  near  tide-water.  In  the  main,  the  steel- 
rail  duty  has  done  its  work,  for  good  or  ill :  it  is  no  longer 
of  great  economic  importance.  The  same  remark  may 
be  made  of  the  duty  on  copper,  which  went  down  in  the 
act  of  1890  to  \y±  cents  a  pound.  Copper  would  not  be 
imported  in  any  event  ;  its  price  at  ordinary  times  is  not 
higher  in  this  country  than  it  is  abroad  ;  a  duty  serves  only 
to  make  it  possible  for  the  combination  of  copper  producers, 
in  occasional  times  of  exceptional  demand,  to  keep  up 
the  price  above  the  foreign  price. 

A  different  aspect  of  the  tariff  of  1890  appeared  in  the 
rise  in  the  duty  on  tin-plates.  This  article  had  never 
been  produced  in  this  country,  and  had  never  been  sub- 


THE    TARIFF  ACT   OF  1890.  273 

jected  to  duties  comparable  to  those  on  other  manufao 
tures  of  iron.  In  1862  a  duty  of  twenty-five  per  cent, 
had  been  imposed,  and  had  been  retained  until  1872, 
when,  at  the  time  of  the  general  reduction  of  that  year, 
it  was  lowered  to  fifteen  per  cent.1  In  1875,  when  the 
general  reduction  of  1872  was  repealed,  the  rate  was 
changed  to  a  specific  duty  of  \-fa  cents  a  pound,  equiva. 
lent  to  about  twenty  per  cent,  at  the  prices  then 
ruling.  But  this  change  did  not  have  any  effect  in  stimu- 
lating domestic  production,  and  in  1883  the  duty  was 
reduced  to  one  cent  a  pound,  equivalent,  at  the  prices  of 
1883,  to  an  ad-valorem  rate  of  about  thirty  per  cent.  At 
that  rate  the  importations  had  been  very  large,  twenty 
millions  of  dollars  and  more  a  year,  and  the  domestic 
production  had  been  nil.  The  question  presented  itself 
squarely  whether  a  further  and  great  extension  of  the 
protective  system  should  be  made.  Those  who  believed 
that  system  to  be  wise,  naturally  maintained  that  this 
article  had  been  unfairly  singled  out  for  a  specially  low 
rate  of  duty  ;  and  in  the  act  of  1890  a  duty  of  2^5-  cents 
a  pound,  equivalent  to  about  seventy  per  cent.,  was  im- 
posed. The  continuance  of  this  duty,  however,  was  made 
subject  to  a  curious  condition,  unprecedented  in  our  tariff 
legislation:  that  after  the  year  1897,  tin-plates  should  be 

1  See  pages  182-185  above.  The  language  of  the  acts  of  1862  and  1875 
was  not  entirely  clear,  and  in  1878  an  attempt  was  made  to  have  tin-plates 
classified  under  another  head  in  the  tariff  schedules,  and  so  subjected  to  a 
higher  duty.  But  Secretary  Sherman  maintained  the  interpretation  of  the 
statutes  which  had  been  followed  since  1862,  and  the  duties  were  collected 
as  stated  in  the  text.  See  a  letter  of  Secretary  Sherman's  in  the  "  Tariff 
Commission  Report  "  of  1882,  p.  208. 


2/4  HISTORY  OF   TfTE  EXISTING    TARIFF. 

admitted  free  of  duty,  unless  the  domestic  production 
for  some  one  year  before  that  date  should  have  equalled 
one  third  of  the  importations  during  any  one  of  the  years 
between  1890  and  1896.  In  other  words,  the  permanent 
maintenance  of  the  duty  was  made  conditional  on  a  sub- 
stantial increase  of  the  domestic  production.  Obviously, 
so  long  as  there  was  no  domestic  production,  the  duty 
had  been  merely  a  revenue  duty, — an  indirect  tax  of  the 
simplest  type,  not  of  the  best  sort  doubtless,  but  sub- 
stantially similar  in  its  effects  to  duties  on  tea  or  coffee. 
The  alternative  now  presented  was  that  it  should  either 
become  a  protective  duty,  with  the  peculiar  effects  flow- 
ing from  such,  or  that  it  should  cease  to  be  a  tax 
at  all.1 

As  to  agricultural  products,  there  were  some  innocuous 
changes,  and  some  of  real  importance.  The  duty  on 
wheat  went  up  from  twenty  to  twenty-five  cents  a  bushel, 
and  that  on  Indian  corn  from  ten  to  fifteen  cents ; 
changes  which  obviously  could  be  of  no  consequence 
whatever.  Equally  insignificant  in  their  general  effects 
were  the  higher  duties  on  potatoes  and  eggs,  which  might 
possibly  have  some  slight  effect  in  checking  the  border 
trade  between  Canada  and  the  Northern  States,  but  in 
the  main  must  be  of  petty  character.  Among  changes  of 
greater  importance  was  an  increase  of  the  duty  on  barley 

1  The  duty  remained  in  force  ;  the  increase  in  domestic  production  did 
take  place.  But  this  was  due  chiefly  to  the  greater  cheapness  of  the  steel 
sheets  which,  when  coated  with  tin,  are  known  as  tin-plates.  On  the  causes 
of  this  change,  seethe  article  in  the  Quarterly  Journal  of  Economics  referred 
to  below  (p.  302),  at  p.  502  of  vol.  xiv. 


THE    TARIFF  ACT  OF  1890.  275 

from  ten  to  thirty  cents  a  bushel ;  a  change  meant  to  pro- 
tect the  farmers  of  some  Northern  States  against  Canadian 
barley.  Oddly  enough,  the  duty  pn  rice,  which,  like  bar- 
ley, is  imported  in  considerable  quantities,  was  slightly 
reduced.  On  another  set  of  agricultural  products  there 
were  some  changes  in  the  direction  of  higher  duties ; 
namely,  on  textile  materials  like  hemp  and  flax.  On  flax 
the  duty  was  increased  from  $20  to  $22.40  a  ton ;  on 
dressed  flax,  from  $40  to  $67.20  a  ton.  On  undressed 
hemp  the  duty  remained  unchanged ;  on  dressed  hemp 
it  went  up  from  $25  to  $50  a  ton.1  Notwithstanding 
some  attempts  to  get  encouragement  for  the  production 
of  jute  in  the  Southern  States,  that  tropical  commodity, 
which  we  import  largely,  was  relieved  from  the  former 
duty  and  admitted  free. 

We  may  now  turn  to  another  phase  of  the  act  of  1890, 
the  remission  of  the  duty  on  sugar,  which  was  important 
in  its  effects  on  the  financial  situation,  and  in  its  connec- 
tion with  the  reciprocity  provisions  of  the  act.  The  duty 
on  sugar  had  been  in  the  main  a  revenue  duty  ;  for  nine 
tenths  of  the  consumption  was  still  supplied  by  impor- 
tation. Only  one  tenth  of  the  sugar  was  made  at  home, 
almost  exclusively  in  the  sugar-cane  district  of  Louisiana ; 
on  this  alone  could  the  distinctive  effects  of  a  protective 
duty  be  felt.  Substantially,  therefore,  the  sugar  duty 
presented  the  same  questions  as  were  presented  by  the 

1  The  duties  on  hemp  and  flax,  reduced  in  1894,  and  raised  again  in  1897 
and  1909,  have  been  of  no  great  industrial  effect.  For  some  discussions  of 
them,  see  the  Quarterly  Journal  of  Economics*  vol.  iii.,  p.  260.  Sisal  grass 
from  Yucatan  has  displaced  coarse  hemp  as  a  fiber  for  making  twine,  and 
fine  hemp  has  never  been  produced  in  the  United  States. 


276  HISTORY  OF   THE  EXISTING    TARIFF. 

tea  and  coffee  duties  in  1872.'  At  the  same  time,  the 
receipts  from  sugar  were  very  large.  They  formed  the 
most  important  single  item  in  the  revenue  from  customs, 
and  in  the  period  immediately  preceding  1890  were  on 
the  average  about  fifty-five  millions  a  year.  In  that 
period  the  United  States  were  embarrassed  by  a  large 
surplus  in  the  revenue,  the  situation  in  this  respect  being 
again  similar  to  that  in  1870-72.  At  the  same  time  the 
duty  on  sugar,  averaging  about  two  cents  a  pound  on  the 
grades  chiefly  imported,  was  high,  considered  simply  as  a 
tax  and  without  regard  to  its  connection  with  the  general 
financial  and  economic  situation.  The  Mills  bill  of  1888 
had  proposed  a  reduction  of  about  fifteen  per  cent.  ;  the 
Senate  bill  of  the  same  year  proposed  to  cut  the  rate  to 
about  one  half  that  then  in  force.  There  was  general 
agreement  that  some  reduction  should  be  made. 

The  McKinley  act  went  further :  it  admitted  all  raw 
sugar  free.  On  refined  sugar  a  duty  of  one  half  cent  per 
pound  was  retained,  by  way  of  protecting  the  domestic 
sugar  refiners.  This  duty  was  open  to  the  objection  of 
playing  into  the  hands  of  the  Sugar  Trust,  which  had 
just  reached  the  stage  of  controlling  practically  the 
encire  sugar  refining  of  the  country.  Undoubtedly  it 
did  ;  but  the  previous  tariff  system,  by  making  the  duty 
on  refined  sugar  higher  than  that  on  raw  sugar,  had  done 
the  same  ;  and  the  act  of  1890  left  the  situation  as  it  was, 
simply  maintaining  for  good  or  ill  a  policy  as  to  the  sugar 
refiners  which  had  been  followed  for  a  generation  or  more. 

1  See  above,  pp.  186-180- 


THE    TARIFF  ACT  OF   1890.  277 

With  the  free  admission  of  raw  sugar  came  a  bounty  to  the 
domestic  sugar  producers  at  the  rate  of  the  former  duty, 
two  cents  a  pound.  There  would. have  been  an  obvious 
inconsistency  in  leaving  the  sugar  producers  to  their  fate, 
at  a  time  when  other  domestic  producers  were  receiving 
increased  protection.  Moreover,  there  was  a  disposition 
to  assist  and  stimulate  the  production  of  sugar  in  other 
ways,  especially  from  beets.  The  bounty  was  accordingly 
given,  at  the  rate  of  two  cents  a  pound,  on  all  domestic 
sugar,  for  the  period  from  July  I,  1891,  to  July  I,  1905. 
Such  a  change  in  one  sense  is  immaterial  to  the  domestic 
sugar  producer.  He  must  sell  his  sugar  at  a  lower  price, 
but  gets  a  bounty  which  makes  up  the  loss.  But  so  far 
as  ease  of  collection  goes,  the  bounty  clearly  is  less  ad- 
vantageous than  the  duty  was.  The  benefit  of  the  duty 
came  to  him  without  trouble,  in  the  shape  of  a  higher 
price.  The  benefit  of  the  bounty  he  can  secure  only  by 
a  process,  somewhat  troublesome  and  not  unattended  with 
expense,  of  filing  descriptions  and  statements  at  govern- 
ment offices,  securing  licenses,  and  submitting  to  the 
regulations  which  the  government  must  of  necessity  pre- 
scribe to  prevent  fraudulent  use  of  the  bounty  provisions. 
So  far  as  the  financial  object  in  view  was  concerned,  the 
sections  on  sugar  accomplished  their  object.  Indeed, 
perhaps  they  more  than  accomplished  it.  The  remis- 
sion of  the  duty  cut  off  fifty  or  sixty  millions  of  revenue ; 
the  bounty  called  for  an  extra  expenditure  of  six  or  eight 
millions.  The  act  also  reduced  the  internal  tax  on  tobacco 
from  eight  cents  to  six  cents  a  pound  ;  and  the  same  Con- 


278  HISTORY  OF   THE   EXISTING    TARIFF. 

gress  that  passed  it  increased  the  appropriations  in  several 
directions,  especially  for  more  liberal  pension  payments. 
It  would  certainly  have  been  wiser  financial  policy  to  be 
content  with  a  reduction  of  the  sugar  duty  such  as  was 
proposed  in  the  Senate  bill  of  1888-89.  Those  who  op- 
posed the  protective  system  on  principle  naturally  objected 
to  the  financial  effects  of  the  sugar  remission  on  still  an- 
other ground — it  left  the  hands  of  Congress  less  free  to 
deal  with  the  more  distinctly  protective  duties.  Such 
duties  as  those  on  wool  and  woollens,  lumber,  iron  ore, 
and  similar  materials,  are  more  burdensome  in  character 
than  was  the  sugar  duty;  but  the  remission  of  these  taxes 
is  much  more  difficult  in  the  face  of  a  deficit  than  of  a 
surplus. 

The  complete  remission  of  the  duty  on  sugar  was  un- 
doubtedly determined  on  as  a  means  of  gaining  popularity 
for  the  new  tariff  act  in  the  West,  where  the  higher  duties 
on  manufactured  articles  might  be  difficult  to  present  in  an 
attractive  light.  The  same  object  was  had  in  view  in 
another  set  of  provisions,  closely  connected  with  the  new 
sugar  schedule, — the  reciprocity  provisions.  The  trend 
of  public  opinion  on  the  tariff  bill,  while  it  was  under  dis- 
cussion in  the  House,  made  some  of  the  Republican  leaders 
uneasy  as  to  its  effects  on  the  party  prospects  in  the 
West ;  and  this  feeling  was  strong  with  Mr.  Blaine,  not 
the  least  shrewd  of  the  Republican  leaders.  The  bill 
had  passed  the  House  of  Representatives  without  the 
reciprocity  provisions ;  they  were  inserted  at  the  last 
moment  in  the  Senate,  almost  under  pressure  from  Mr. 


THE    TARIFF  ACT  OF  1890.  2/9 

Elaine  and  those  who  shared  his  views.  The  effect  of 
these  provisions  was  to  give  the  President  power  to  impose 
by  proclamation  certain  duties  oa  sugar,  molasses,  tea, 
coffee,  and  hides,  if  he  considered  that  any  country  export- 
ing these  commodities  to  the  United  States  "  imposes 
duties  or  other  exactions  on  the  agricultural  or  other 
products  of  the  United  States,  which,  in  view  of  the 
free  introduction  of  sugar,  molasses,  tea,  coffee,  and  hides 
into  the  United  States,  he  may  deem  to  be  reciprocally 
unjust  or  unreasonable."  ' 

This  particular  mode  of  reciprocal  engagement  has  a 
distinct  economic  advantage  over  the  ordinary  form  of 
reciprocity.  The  ordinary  form  consists  in  the  simple 
remission  of  duties  to  a  favored  country,  duties  remaining 
on  goods  coming  from  countries  not  favored.  Such  a 
remission  is  likely  not  to  redound  to  the  advantage  of  the 
domestic  consumer.  Unless  the  favored  country  can 
easily  supply  the  whole  market,  or  other  countries  are 
quickly  admitted  to  the  lower  duties,  prices  are  not 
affected,  and  the  foreign  producer  reaps  the  whole  benefit 
of  the  remission.  The  United  States  has  had  one  con- 
spicuous illustration  of  the  workings  of  reciprocity  of  this 
sort,  in  the  treaty  of  1876  with  the  Hawaiian  Islands.  Under 
that  treaty,  sugar  was  admitted  free  from  the  islands  ;  but 
they  were  far  from  being  able  to  supply  all  the  sugar 
consumed  ;  other  sugar  was  imported,  paying  duty ;  the 

1  The  duties  authorized  under  these  conditions  were :  on  coffee,  three  cents 
a  pound ;  on  tea,  ten  cents  a  pound  ;  on  hides,  one  and  a  half  cents  a 
pound  ;  on  the  grades  of  raw  sugar  chiefly  imported,  a  trifle  over  one  cent 
per  pound, — about  one  half  the  duty  which  was  in  force  before  1890. 


280  HISTORY  OF   THE  EXISTING   TARIFF. 

price  remained  as  high  as  before,  and  the  Hawaiian  planters 
reaped  the  benefit  of  the  remission.1  But  the  re-imposition 
of  duties  on  articles  coming  from  a  particular  country,  if 
it  leaves  enough  of  other  countries  in  the  field,  not  paying 
duty,  to  supply  the  domestic  consumption,  brings  a  press- 
ure to  bear  on  the  enemy  without  injuring  the  consumers 
at  home.  It  is  true  that  if  one  of  the  countries  on  whose 
goods  duties  were  re-imposed,  should  supply  a  very  large 
part  of  our  consumption,  the  result  would  not  be  so  in- 
nocuous. If,  for  example,  the  duty  of  three  cents  a  pound 
were  imposed  on  coffee  from  Brazil,  all  coffee  would  go  up 
in  price,  not  only  that  from  Brazil,  but  that  from  other 
countries ;  and  the  producers  from  other  countries  would 
gain  three  cents  a  pound  on  their  coffee,  which  the  con- 
sumers in  the  United  States  would  pay.  But  it  was  not 
probable  that  the  power  given  by  the  reciprocity  provisions 
would  ever  be  exercised  in  a  case  of  this  sort.  The  simple 
threat  of  re-imposing  duties  would  usually  be  relied  on  as 
a  means  of  securing  concessions  from  other  countries. 

Concessions  so  obtained  may  or  may  not  be  advanta- 
geous to  the  countries  making  them  ;  and  they  may  or  may 
not  be  of  real  importance  and  advantage  to  the  United 
States.  The  countries  from  which  concessions  were  asked 
were  chiefly  the  South  American  countries.  So  far  as 
agricultural  commodities  imported  into  them  from  the 
United  States  were  concerned,  a  lowering  of  duties  meant 
lower  prices  to  the  South  American  consumers,  and 

1  Compare  what  is  said  below,  at  p.  398,  and  the  references  there  given, 
on  the  Hawaiian  treaty  and  the  general  sugar  situation. 


TARIFF  ACT  OF  1890.  28l 

very  probably  an  enlarged  demand  for  such  commodities 
sent  from  the  United  States.  Grain,  flour,  provisions, 
are  sent  to  these  countries  by  the  United  States  alone, 
and  a  remission  of  duties  on  them  operates  as  a  remission 
of  the  duty  on  English  tin-plate  would  operate  in  the 
United  States:  it  is  practically  a  complete  remission. 
Such  changes  bring  about  a  real  reduction  of  the  burdens 
of  taxation,  and  a  real  enlargement  of  the  international 
division  of  labor. 

But  if  the  South  American  countries  lower  their  duties 
on  manufactured  goods  from  the  United  States,  the  result 
may  be  different.  Many  of  these  goods  are  not  made  as 
cheaply  in  the  United  States  as  in  European  countries ; 
as  to  others,  the  United  States  might  not  be  able  to 
supply  the  whole  consumption  of  the  country  which  gave 
it  favors.  Under  such  conditions,  the  lower  duties  would 
not  mean  lower  prices  to  the  South  American  consumer. 
The  United  States  would  then  be  in  much  the  same  rela- 
tion to  them,  as  the  Hawaiian  Islands  were  to  the  United 
States  under  the  reciprocity  treaty  of  1876.  Concessions 
of  this  sort,  however,  which  do  not  redound  to  the 
ultimate  advantage  of  the  communities  giving  them,  are 
not  likely  long  to  remain  preferential.  Sooner  or  later,  they 
are  likely  to  be  granted  to  all  comers.  The  experience 
of  European  countries  under  commercial  treaties,  espe- 
cially under  the  net-work  of  treaties  which  spread  over 
Europe  after  the  conclusion  of  the  treaty  of  1860  between 
England  and  France,  shows  that  a  remission  of  duty  in 
favor  of  one  country  soon  is  extended  to  others,  and 


282  HISTORY  OF  THE  EXISTING  TARIFF. 

becomes  practically  equivalent  to  a  general  lowering  of 
the  customs  scale.  This  was  likely  to  be  the  outcome 
of  any  concessions  secured  to  the  United  States  from 
South  American  countries  under  the  reciprocity  provi- 
sions ;  a  result  no  doubt  advantageous  to  all  concerned, 
but  less  peculiarly  advantageous  to  the  United  States 
than  more  limited  concessions  would  have  been.1 

As  a  whole,  the  tariff  act  of  1890  presented  to  the 
American  people  without  disguise  the  question  whether 

1  In  the  course  of  1892,  treaties  were  concluded  with  the  following  coun- 
tries :  Great  Britain,  for  Jamaica,  Trinidad,  Barbadoes,  and  British  Guiana ; 
Spain,  for  Cuba  and  Porto  Rico  ;  Salvador  ;  the  Dominican  Republic  ; 
Nicaragua  ;  Honduras  ;  Guatemala  ;  and  Brazil.  The  remissions  or  reduc- 
tions of  duty  secured  by  these  treaties  were  chiefly  on  agricultural  articles 
and  others  produced  abundantly  and  cheaply  in  the  United  States.  Duties 
were  imposed  under  the  authority  conferred  by  the  reciprocity  section,  on 
sugar,  tea,  coffee,  hides,  coming  from  Venezuela,  Colombia,  and  Hayti. 
The  only  country  of  considerable  importance  among  these  was  Venezuela, 
which  usually  sends  to  this  country  about  one  tenth  of  the  coffee  imported. 

With  Germany,  an  arrangement  was  made  by  which  the  United  States 
got  the  benefit  of  the  slightly  lower  rates  of  duty  conceded  by  Germany  to 
Austria  and  Hungary  by  the  treaties  of  1892  with  these  countries.  With 
France,  a  similar  arrangement  was  made,  by  which  American  commodities 
were  admitted  at  the  minimum  tariff  of  the  French  legislation  of  1892. 

All  these  arrangements  came  to  an  end  with  the  tariff  of  1894.  The  act 
of  that  year,  it  is  true,  contained  a  saving  clause  by  which  the  reciprocity 
treaties  were  to  remain  in  force  ' '  except  where  inconsistent  with  the  pro- 
visions of  this  act."  But  as  the  act  admitted  tea  and  coffee  free  uncondi- 
tionally, and  imposed  a  duty  of  forty  per  cent,  on  all  sugar,  its  provisions 
were  necessarily  inconsistent.  The  duty  reimposed  on  sugar  deprived  the 
United  States  of  the  chief  quid  pro  quo  which  had  been  available  under  the 
act  of  1890, — the  maintenance  of  the  free  admission  of  sugar.  An  account 
of  the  whole  episode  is  given  in  Laughlin  and  Willis's  "  Reciprocity," 
chs.  VI.,  VII.,  VIII.  ;  and  an  analysis  of  the  working  of  the  treaty  with 
Brazil,  the  largest  of  the  South  American  countries,  in  an  article  by  L. 
Hutchinson,  Political  Science  Quarterly,  vol.  XVIII.,  June,  1903. 


THE    TARIFF  ACT  OF   1890.  283 

they  wished  a  large  extension  of  the  protective  system 
beyond  the  point  to  which  it  had  developed  by  the  legis- 
lation of  the  war  period.  The  act  of  1883,  as  we  have 
seen,  did  indeed  raise  not  a  few  of  the  protective  duties ; 
but  other  duties  it  lowered,  and  the  advances  were  neither 
so  great  nor  so  conspicuously  put  forward  as  in  the  act  of 
1890.  A  retention  of  the  existing  state  of  things,  such  as 
on  the  whole  the  act  of  1883  amounted  to,  might  be  urged 
on  the  ground  that  vested  interests  should  not  be  dis- 
turbed, and  that  the  inevitable  disadvantages  of  any  far- 
reaching  change  would  outweigh  any  ultimate  gain.  The 
act  of  1890  boldly  proposed  something  more :  a  radical 
extension  of  the  protective  system.  The  question  of 
principle  never  was  so  squarely  presented. 


CHAPTER  VI. 

THE  TARIFF  ACT  OF    1894. 

THE  question  of  principle  which  was  presented  to  the 
American  people  by  the  tariff  act  of  1890  was  answered 
with  remarkable  promptness,  and,  to  all  appearances,  in 
unmistakable  terms.  Immediately  after  the  passage  of 
the  act,  the  party  which  had  thus  espoused  the  extreme 
protective  policy  suffered  a  crushing  defeat ;  and,  after 
two  years  of  discussion  and  deliberation,  the  verdict  at 
the  polls  was  again  overwhelmingly  against  it.  The 
McKinley  tariff  had  become  law  in  October  of  1890.  In 
November,  the  Congressional  elections  were  held,  and 
the  Republicans  were  defeated  as  they  had  never  been 
defeated  before.  In  the  new  Congress  which  was  to  suc- 
ceed that  which  had  passed  the  act  of  1890,  they  secured 
only  one  quarter  of  the  Representatives ;  their  opponents 
outnumbered  them  three  to  one.  Even  States  like  Massa- 
chusetts, Ohio,  Illinois,  Michigan,  long  supposed  to  be 
stanchly  Republican,  returned  Democratic  majorities. 
The  tariff  question,  which  had  been  uppermost  in  public 
debate  at  this  election,  was  again  uppermost,  two  years 
later,  in  the  election  of  1892.  President  Cleveland,  who 

had  made  the  tariff  question  the  political  issue  of  the  day, 

284 


THE    TARIFF  ACT  OF   1894.  285 

was  once  more  nominated  by  the  Democrats  ;  and  Presi- 
dent Harrison  was  renominated  by  the  Republicans. 
Again  the  result  was  a  triumph  for/"$he  Democrats,  whose 
candidate  received  nearly  twice  as  many  electoral  votes  as 
his  opponent.  Again  a  row  of  Western  States  joined  the 
ranks  of  the  Democrats, — Indiana,  Illinois,  Wisconsin  ; 
while  Ohio  was  retained  on  the  Republican  side  by  a 
slender  majority  of  a  bare  thousand  votes.  The  Congres- 
sional elections,  while  less  dramatically  one-sided  than 
those  of  1890,  told  substantially  the  same  story.  The 
Democrats  had  an  overwhelming  majority  in  the  House  ; 
and  in  the  Senate,  as  the  elections  in  the  various  State 
legislatures  were  gradually  held,  they  secured  a  working 
majority.  The  result  was  to  assure  them  of  full  control 
of  all  branches  of  the  federal  legislature  in  the  Fifty-third 
Congress,  for  the  term  of  1 893-95. * 

The  Democrats,  twice  victorious,  might  fairly  claim  an 
emphatic  declaration  of  the  people  in  favor  of  their  policy. 
How  clear  the  popular  verdict  may  really  have  been,  is  as 

1  For  convenience  of  reference,  the  strength  of  the  two  parties  in  Congress 
in  1889-95  is  here  summarily  stated  : 

House.  Senate. 


Republicans.  Democrats.  Republicans.  Democrats. 
5 1st  Congress,  1889-91,       166                159  39  37 

52d  Congress,  1891-93,         88  236  47  39 

53d  Congress,  1893-95,       126  22O  38  44 

In^addition  to  the  44  Democrats  and  38  Republicans  in  the  Senate  of  the 
53d  Congress,  there  were  three  Populists.  These  might  be  expected  ordi- 
narily to  vote  with  the  Democrats  on  tariff  questions  ;  but  their  support 
could  not  be  implicitly  relied  on. 


286  HISTORY  OF   THE  EXISTING   TARIFF. 

difficult  to  say  as  it  must  always  be  to  interpret  the  mean- 
ing  of  a  general  election.  The  demoralization  of  the  civil 
service,  the  scandals  which  that  demoralization  is  sure  to 
bring  on  every  administration,  the  usual  reaction  of  public 
favor,  defections  to  the  Populist  Party — all  these  played 
their  part.  On  the  tariff  itself,  there  was  little  in  public 
discussion  to  indicate  that  the  true  questions  at  issue  were 
fairly  before  the  popular  mind.  A  vague  uneasiness 
about  trusts  and  monopolies,  which  the  protective  duties 
were  supposed  to  promote,  clearly  had  much  effect  in 
strengthening  the  hands  both  of  Democrats  and  of  Popu- 
lists; and  the  comparatively  simple  questions  which  at 
bottom  are  involved  in  the  protective  controversy  were 
obscured  by  a  cloud  of  talk  about  pauper  wages  and 
monopolist  manufacturers,  British  free  trade  and  Ameri- 
can patriotism.  Yet  the  tariff  certainly  had  been  squarely 
presented  as  the  issue  in  these  compaigns,  and  the  Demo- 
crats were  justified  in  acting  on  the  theory  that  the 
popular  will  had  declared  itself  against  the  policy  of  high 
protection. 

But  the  enthusiasm  which  the  victory  at  first  aroused 
among  the  Democrats  was  dampened  almost  at  once  by 
the  events  of  the  extra  session  of  the  summer  of  1893. 
The  silver  question  had  not  been  at  issue  between  the 
parties  in  1892.  President  Cleveland  had  repeatedly  de- 
clared himself  to  be  opposed  to  the  policy  of  enlarging 
the  silver  currency.  The  Republicans  also,  even  though 
they  had  tried  to  placate  the  silver  element  by  passing 
the  silver  purchase  act  of  1890,  had  none  the  less  declared 


THE    TARIFF  ACT  OF  1894.  287 

themselves  in  favor  of  keeping  the  silver  issues  at  par  with 
gold.  But  the  silver  question,  pushed  aside  by  the  tariff 
question  in  1890-92,  came  suddenly  to  the  front  in  1893, 
when  the  commercial  crisis,  ascribed  (with  sufficient 
reason)  to  the  excessive  issues  of  silver  currency,  com- 
pelled action  on  the  financial  situation.  President  Cleve- 
land called  an  extra  session,  for  the  one  purpose  of 
repealing  the  silver  purchase  act  and  discontinuing  silver 
coinage  and  silver  issues.  The  strong  element  in  his 
party  which  was  in  favor  of  the  free  coinage  of  silver 
fought  this  proposal,  vigorously  in  the  House,  desperately 
in  the  Senate.  The  administration  succeeded  ;  its  policy 
was  carried  out ;  the  silver  purchases  were  brought  to  an 
end.  But  the  bitter  struggle  within  the  ranks  of  the 
Democrats  did  much  to  shatter  their  cohesion,  and  to 
deprive  them  of  that  spirit  of  determination  in  their  own 
ranks,  and  that  respect  and  prestige  in  the  community, 
which  are  secured  by  a  united  and  single-minded  party. 

Another  factor  that  weakened  the  effect  of  the  victories 
of  1890  and  1892  was  the  narrow  Democratic  majority  in 
the  Senate.  The  slowness  with  which,  under  our  political 
system,  the  composition  of  the  Senate  responds  to 
changes  in  the  popular  vote,  is  shown  by  the  precarious 
hold  which  the  dominant  party  had  in  that  body.  In  the 
House,  with  a  majority  of  nearly  two  to  one,  it  could  pro- 
ceed without  regard  to  discontent  or  dissent  on  the  part 
of  a  fraction  of  its  own  members.  But  in  the  Senate  the 
defection  of  a  very  few  among  the  majority  would  des- 
troy its  control  of  legislation.  As  it  happened,  for  one 


288  HISTORY  OF  THE  EXISTING   TARIFF. 

reason  or  another  there  was  danger  of  such  defections. 
Some  Democratic  Senators  were  half-hearted  on  the  gen- 
eral question  of  tariff  reduction ;  others  came  from  States 
which  had  strong  interest  in  particular  duties, — especially 
the  Louisiana  Senators.  Old  quarrels  and  bickerings, 
dating  back  to  President  Cleveland's  first  administration, 
and  due  chiefly  to  petty  squabbles  over  appointments  to 
office,  caused  still  others  to  take  a  spiteful  pleasure  in 
blocking  the  movement  for  tariff  reform  which  the  Presi- 
dent had  so  much  at  heart.  The  administration  made 
some  endeavor,  both  during  the  extra  session  of  1893  and 
during  this  regular  session,  to  restore  unity  and  discipline, 
and  to  bring  all  the  Senators  to  the  support  of  the  party 
policy,  by  putting  offices  at  the  disposal  of  the  sulky  few. 
But  this  move  availed  little.  It  threw  back  for  the  time 
being  the  all-important  cause  of  reform  in  the  machinery 
of  the  government ;  and  yet  did  little  or  nothing  to 
remove  the  difficulties  that  arose  from  the  narrow  and 
uncertain  majority  in  the  Senate.  Thus,  for  one  cause 
and  another,  there  was  danger  of  defection  in  that  body, 
and  a  need,  based  on  more  or  less  serious  grounds,  of  con- 
ciliation and  of  careful  management ;  a  need  which,  as  it 
turned  out,  had  a  great  and  unexpected  effect  on  the  final 
shape  of  the  tariff  act. 

Such  were  the  political  conditions  under  which  the 
regular  session  of  1893-94  began.  At  the  extra  session 
of  1893,  no  attempt  had  been  made  to  deal  with  the 
tariff  ;  but  the  committees  had  been  arranged,  and  among 
them  the  Committee  of  Ways  and  Means,  which  had  thus 


THE   TARIFF  ACT  OF  1894.  289 

been  able  to  begin  its  preparations  at  an  early  date. 
Progress  with  the  tariff  bill  was  accordingly  easy  in  the 
House.  The  committee  reported  /  its  bill  as  early  as 
December  19.  That  bill  proposed  some  important  remis- 
sions of  duty,  and  in  all  directions  made  considerable 
reductions ;  not  enough,  indeed,  to  make  it  a  revolution- 
ary measure,  yet  enough  to  bring  about,  if  enacted,  a  real 
and  unmistakable  change  in  the  general  tariff  policy  of 
the  United  States.  Its  specific  provisions  will  be  more 
conveniently  discussed  as  we  follow  one  by  one  the  dif- 
ferent phases  of  the  proposed  legislation,  and  the  final 
outcome  of  the  whole.  The  House  acted  with  reason- 
able promptness:  the  bill  was  passed  on  February  I,  sub- 
stantially in  the  shape  given  it  by  the  party  leaders  on 
the  Ways  and  Means  Committee. 

Matters  went  more  slowly  in  the  Senate.  There  the 
finance  committee  did  not  report  the  bill  until  March  20, 
and  then  with  many  and  important  amendments.  The 
changes  were  all  in  the  same  direction, — toward  moder- 
ating the  reductions,  and  taking  the  edge  off  the  meas- 
ure as  passed  by  the  House.  When  the  bill  came  from 
the  committee  to  the  Senate,  still  further  amendments  of 
the  same  sort  were  added.  Hence  when,  after  long 
delays,  it  was  finally  passed  by  the  Senate,  on  July  3,  it 
was  a  very  different  measure,  in  spirit  and  in  details,  from 
that  which  had  been  passed  by  the  House. 

The  House  and  Senate  disagreeing,  the  bill  went  to  a 
conference  committee.  Almost  without  exception,  dur- 
ing the  last  thirty-five  years,  the  details  of  tariff  bills  have 


2QO  HISTORY  OF  THE  EXISTING   TARIFF. 

been  finally  adjusted  in  such  committees ;  and  it  was  to 
be  expected  that  in  this  case,  as  in  others,  the  act  as 
passed  would  be  half-way  between  the  House  bill  and  the 
Senate  bill.  This  expectation  was  disappointed.  In  the 
Senate  the  bill  there  had  been  passed  by  a  vote  of  thirty- 
nine  to  thirty-four,  and  among  the  thirty-nine  were  two 
or  three  Populist  Senators'  who  owed  no  allegiance  to  the 
Democratic  Party.  The  votes  of  all  the  Democratic  Sena- 
tors were  felt  to  be  necessary  for  its  final  passage.  Sev- 
eral among  them  insisted  on  amendments  admitted  to  be 
distasteful  to  the  mass  of  their  party  associates ;  and  the 
close  balance  of  parties  in  the  Senate  enabled  them  to 
command  the  situation.  President  Cleveland's  letter  to 
Mr.  Wilson,  the  chairman  of  the  House  Committee  of 
Ways  and  Means,  urging  resistance  to  the  Senate  amend- 
ments, had  no  effect  beyond  that  of  making  clear  to  the 
country  what  were  his  own  views.  Whether  better  man- 
agement in  the  Senate  would  have  secured  a  result  more 
in  consonance  with  the  party  pledges  and  principles  is  not 
easy  to  say  :  beyond  question,  the  leadership  of  the  Demo- 
crats in  the  upper  branch  was  lamentably  unskilful.  In 
the  end,  the  House  accepted  all  the  amendments  of  the 
upper  body,  and  the  bill  as  shaped  in  the  Senate  became 
the  act  of  1894.  President  Cleveland  signified  his  justi- 
fiable discontent  with  its  provisions  by  permitting  it  to 
become  law  without  his  signature.  It  finally  went  into 
effect  on  August  28. 

So  much  as  to  the  immediate  history  of  the  act.     We 
may  proceed  now  to  consider  its  main  provisions. 


THE    TARIFF  ACT  OF  1894.  2$l 

First  and  foremost  was  the  removal  of  the  duty  on 
wool,  and  with  it  an  entire  change  in  the  duties  on  woollen 
goods.  Wool  and  woollens  had  bee^  for  years  the  central 
part  in  the  protective  system.  The  change  here  was  an 
important — almost  revolutionary  one ;  and  it  may  be 
remarked  at  once  that  in  the  whole  act  no  other  articles 
of  large  importance  were  thus  incisively  dealt  with. 

Free  wool  was  important  in  its  political  and  in  its  eco- 
nomic aspects.  The  duty  on  wool  had  been  the  most 
significant  feature  in  the  policy  of  all-inclusive  protection 
which  the  Republicans  had  emphasized  in  the  McKinley 
act  of  1890.  It  had  been  almost  the  only  article  through 
which  protection  could  be  promised  and  given  to  agricul- 
tural voters.  There  were  duties,  to  be  sure,  on  wheat, 
corn,  and  meats — articles  which  were  continuously  ex- 
ported and  obviously  could  not  be  affected  by  an  import 
duty.  But  wool  was  imported,  and  was  really  affected  by 
the  duty ;  and  it  could  be  fairly  maintained  that  here  the 
farmers  got  some  share  of  the  benefits  of  the  protective 
system.  Moreover,  some  of  the  central  States  of  the 
country,  like  Ohio,  where  there  was  much  wool-growing, 
were  closely  divided  in  politics.  Here  the  wool  duty 
played  a  prominent  part ;  and  it  required  some  courage 
among  the  Democrats  to  present  themselves  squarely  on 
the  platform  of  free  wool. 

In  its  economic  aspects  the  removal  of  the  duty  on 
wool  was  important  as  a  crucial  application  of  the  prin- 
ciple of  free  raw  materials.  In  that  advocacy  of  protec- 
tion which  has  gained  the  most  respectable  hearing  from 


292  HISTORY  OF   THE  EXISTING    TARIFF. 

serious  students  of  economics, — the  advocacy,  namely,  of 
what  goes  by  the  names  of  developing  protection,  educa- 
tional protection,  protection  to  young  industries, — it  has 
usually  been  explained  that  crude  materials  are  beyond 
the  scope  of  the  protective  policy.  Even  in  the  political 
arguments  which  we  often  hear  from  German  writers  of 
the  present  time,  and  in  which  national  dependence  and 
self-sufficiency  play  a  large  part,  the  line  has  usually  been 
drawn  against  the  inclusion  of  articles  of  this  sort  in  the 
protective  regime.  The  desire  to  encourage  the  manu- 
facture of  woollens  has  probably  been  quite  as  effective 
as  these  more  theoretical  considerations  in  preventing 
the  extension  of  the  protective  policy  to  wool,  even  in 
the  countries  which  in  late  years  have  gone  so  far  in  the 
direction  of  protection.  At  all  events,  no  country  of 
advanced  civilization  has  maintained  any  duty  on  this 
material,  and  the  retention  of  such  a  duty  in  the  United 
States  was  perhaps  the  most  characteristic  feature  of  our 
protective  system.  President  Cleveland  had  specifically 
advocated  the  free  admission  of  wool  in  his  message  of 
1887;  the  Democrats  had  put  it  on  the  free  list  in  the 
Mills  Bill,  in  which  they  outlined  their  policy  in  1888; 
the  Republicans  had  emphasized  their  adherence  to  the 
opposite  policy  by  increasing  the  duty  on  wool  in  the 
McKinley  act.  Now,  at  last,  it  went  on  the  free  list. 

Equally  great,  at  least  in  form,  was  the  change  in  the 
duties  on  woollen  goods.  Here  the  curious  system  of 
compound  duties  was  completely  swept  away.  Its  his- 
tory and  development,  from  the  first  germs  in  1861  to  the 


THE    TARIFF  ACT  OF   1894.  293 

elaborate  rates  in  the  tariff  act  of  1890,  have  been  suffi- 
ciently detailed  in  the  preceding  chapters.  No  part  of 
the  tariff  was  more  intricate  ;  in  none  was  it  more  difficult 
to  ascertain  the  real  degree  of  net  protection  finally  given 
the  manufacturers  ;  in  none  were  the  duties  higher.  In 
place  of  these  old  complex  rates  a  simple  system  of  ad- 
valorem  duties  was  established.  In  the  bill  as  passed  by 
the  House  the  rate  (on  the  important  classes  of  woollen 
goods)  was  made  forty  per  cent,  in  the  first  year,  with  a 
reduction  of  one  per  cent,  each  year  for  five  years,  until 
eventually  a  definitive  rate  of  thirty-five  per  cent,  should 
be  reached.  But  among  the  many  changes  made  by  the 
Senate  was  the  adoption  of  a  much  more  conservative 
policy  as  to  woollens,  and  a  considerable  advance  beyond 
the  House  rates.  The  rate  was  fixed  at  fifty  per  cent., 
once  for  all,  on  the  more  important  classes  of  goods. 
Certain  cheaper  sorts  of  blankets  and  flannels,  it  is  true, 
were  subject  to  no  more  than  twenty-five  per  cent. ;  and 
the  cheapest  kinds  of  fabrics  for  men's  and  women's 
wear  were  to  pay  but  forty  per  cent.  But,  as  in  former 
tariff  acts,  these  lower  rates  were  applicable  only  to  goods 
which  had  not  been  imported  in  the  past,  and  would  not 
be  imported  under  the  new  rates.  On  all  men's  clothes 
and  women's  dress-goods  which  were  valued  at  more  than 
50  cents  a  pound, — that  is,  on  practically  the  whole  mass 
of  such  articles  really  subject  to  foreign  competition,— 
and  on  all  manufactures  of  wool  not  specially  provided 
for,  the  ad-valorem  duty  was  that  of  the  McKinley  act, — 
fifty  per  cent.  Similarly,  on  the  important  classes  of 


294  HISTORY  OF   THE  EXISTING   TARIFF. 

carpets,  while  the  old  specific  or  compensating  duty  dis- 
appeared, the  ad-valorem  duty  was  left  at  forty  per  cent. 
In  general,  the  higher  ad-valorem  rates  established  by  the 
tariff  act  of  1890  remained  untouched:  the  change  on 
woollen  goods  was  limited  to  a  simplification  of  the  sys- 
tem of  duties  by  the  abolition  of  those  specific  rates 
which  had  previously  been  levied  as  an  offset  to  the 
duties  on  the  raw  material. 

Theoretically,  therefore,  the  manufacturers  of  woollen 
goods  lost  nothing  by  the  change.  The)7  were  treated,  in 
the  act  as  finally  passed,  with  marked  tenderness :  a  ten- 
derness further  emphasized  by  the  fact  that,  while  wool 
was  admitted  free  at  once,  the  new  duties  on  woollens 
did  not  go  into  effect  until  January  i,  1895.  For  a  sea- 
son they  thus  got  their  material  free,  yet  had  the  benefit 
of  the  old  duties  on  their  goods.  Practically,  however, 
even  with  this  aid  toward  adjusting  themselves  to  the 
new  conditions,  the  manufacturers  had  to  face  a  trying 
period  of  transition.  We  have  seen,  in  the  preceding 
chapters,  that  the  specific  duties  on  woollens,  though 
nominally  a  simple  offset  for  the  increased  price  of  wool 
due  to  the  duty  on  that  material,  contained  in  many 
cases  a  large  amount  of  disguised  protection.  This  was 
lost  under  the  new  system.  Even  where  the  case  was 
different,  and  where  the  specific  duties  had  done  no  more 
than  to  compensate,  the  gain  from  the  abolition  of  the 
duties  on  wool  did  not  inure  to  the  manufacturers  by  any 
automatic  process.  They  had  to  learn  to  take  advantage 
of  the  lower  price  at  which  they  could  buy  the  imported 


THE   TARIFF  ACT  OF  1894.  29$ 

wool,  now  free ;  and  only  by  taking  full  advantage  of  it 
could  they  be  in  a  position  to  meet  the  competition  of 
the  foreign  makers,  whose  products  were  coming  in  at 
the  simple  ad-valorem  duty  on  woollens.  To  do  this,  the 
domestic  manufacturers,  long  confined  to  the  use  of  do- 
mestic wool  and  of  a  very  small  range  of  foreign  wool, 
had  to  learn  to  adjust  or  improve  their  machinery,  to  use 
new  qualities  of  wool,  and  to  make  new  kinds  of  cloths. 
The  advocates  of  the  remission  of  the  duty  on  the  raw 
materials  had  always  maintained  that  the  change  would 
vivify  the  woollen  manufacture,  widen  its  range,  and  in- 
crease its  prosperity.  On  the  other  hand,  among  the 
manufacturers  and  their  representatives,  there  had  been  a 
natural  aversion  to  the  abandonment  of  a  system,  how- 
ever complicated  and  confused,  to  which  the  industry  had 
been  compelled  to  accommodate  itself  by  a  quarter-cen- 
tury of  legislation.  What  the  final  outcome  would  be, 
could  appear  only  after  a  considerable  trial  of  the  new 
system,  continued  over  some  years  at  least.  But  the 
general  public  had  not  been  trained  by  either  side  in  the 
controversy  to  await  the  results  with  any  patience.  The 
protectionists  had  predicted  immediate  disaster ;  their 
opponents  immediate  prosperity.  This  mode  of  dealing 
with  controverted  questions  is  perhaps  inevitable  in  popu- 
lar discussion  :  certainly  the  post  hoc^propter  hoc  argument 
has  been  applied  to  the  protective  controversy,  both  in 
its  larger  aspects  and  in  its  relation  to  particular  indus- 
tries, with  astonishing  readiness.  No  critical  observer 
could  expect  the  change  in  the  duties  on  wool  and  wool- 


296  HISTORY  OF   THE  EXISTING    TARIFF. 

lens  to  show  its  real  effects  in  one  season,  or  in  several 
seasons,  or  to  work  out  its  results  without  more  or  less 
uneasiness  and  embarrassment  for  the  domestic  producers. 
That  its  ultimate  result — considering  how  tenderly  the 
manufacturers  were  dealt  with  in  the  act  of  1894 — would 
be  harmful  to  the  woollen  industry  as  a  whole,  seems 
highly  improbable.  So  far  as  the  general  question  of 
protection  was  concerned,  the  wool  and  woollen  schedule 
in  the  act  of  1894,  while  it  made  a  sharp  break  with  the 
past,  in  putting  on  the  free  list  at  least  one  important 
raw  material,  evidently  left  the  principle  of  protection, 
as  applied  to  manufacturers,  absolutely  untouched,  and 
affected  the  operations  of  the  woollen  manufacturers  no 
more  than  was  inevitable  in  view  of  the  radical  policy  fol- 
lowed with  regard  to  wool.1 

On  other  textile  materials  and  products  the  changes  in 
duties  were  by  comparison  unimportant.  On  most  manu- 
factures of  cotton  there  was  some  change,  but  in  few  cases 
an  effective  change.  On  some  of  the  cheaper  grades  there 
was  on  the  surface  a  considerable  reduction.  Thus  the 
cheapest  class  of  unbleached  and  unprinted  cotton  goods 
became  subject  to  a  duty  of  one  cent  per  yard,  in  place 
of  the  old  duty  of  two  and  one-half  cents.  But  these 


1  For  some  consideration  in  detail  of  the  effects  of  the  old  system  on 
wool  and  woollens,  see  an  article  by  the  present  writer  in  Quarterly 
Journal  of  Economics  for  October,  1893  ;  a  criticism  of  this  article  by 
Mr.  S.  N.  D.  North  in  the  Bulletin  of  the  Wool  Manufacturers,  for 
December,  1893  ;  and  a  pamphlet  by  Mr.  E.  D.  Page,  on  The  Woollen 
Tariff  (New  York,  1893).  Compare  also  what  is  said  of  the  act  of  1897, 
infra,  pp.  328-335. 


THE    TARIFF  ACT  OF   1894.  297 

goods  are  made  as  cheaply  in  the  United  States  as  in 
foreign  countries,  if  not  more  cheaply  ;  they  would  not 
be  imported  in  any  event ;  and  the  change  in  duties  was 
merely  nominal.  On  finer  cottor/goods,  more  than  likely 
to  be  imported,  the  changes  in  rates  were  not  great.  Where 
the  duty  had  been  fifty  per  cent,  in  1890,  it  became  forty 
per  cent,  in  1894;  where  it  had  been  forty  percent.,  it 
became  thirty-five  per  cent.  On  knit  goods  there  was  a 
more  considerable  reduction,  at  least  as  compared  with 
the  rates  of  1890.  These  goods,  as  we  have  seen,  had 
been  subject  in  1890  to  a  complicated  series  of  mixed 
specific  and  ad-valorem  duties.  They  were  now  subject 
to  a  simple  duty  of  fifty  per  cent.  This,  while  a  reduc- 
tion from  the  rates  established  in  1890,  was  higher  than 
the  duty  in  force  before  that  date.  Here,  as  in  not  a  few 
other  cases,  the  reform  movement  of  1894,  as  checked 
and  pruned  in  the  Senate,  did  not  even  succeed  in  wiping 
out  all  the  effects  of  the  extreme  protective  movement 
that  preceded  it. 

Silk  manufactures,  on  which  the  protective  duties  of 
the  last  generation  had  very  important  effects,  were  hardly 
touched.  The  duties  on  some  silks  went  down  from  sixty 
to  fifty  per  cent.,  on  others  from  fifty  to  forty-five  per 
cent.  The  changes  were  hardly  worth  mentioning.  Much 
the  same  was  the  case  with  linens.  Dressed  flax  was 
admitted  at  i£  cents  per  pound,  just  half  the  duty  of 
1890.  Manufactures  of  flax  were  admitted  at  reduc- 
tions of  duty  very  similar  to  those  just  noted  as  to 
silks.  Since  virtually  no  linens  of  finer  quality  were  (or 


298  HISTORY  OF   THE  EXISTING   TARIFF. 

are)  produced  in  this  country,  and  those  of  coarser  quality 
were  as  effectually  shielded  by  the  new  duty  as  by  the  old, 
matters  remained  very  much  as  they  had  been.  One 
change  was  an  exception.  Bagging  of  jute,  flax,  or  hemp, 
for  grain  or  cotton,  was  admitted  free  of  duty — a  direct 
concession  to  the  farmers  and  planters. 

Next  we  may  turn  to  the  duties  on  minerals  and  min- 
eral products.  Here  the  articles  to  which  public  attention 
was  chiefly  given  were  coal  and  iron  ore.  These  are  by  no 
means  the  most  important  articles  in  the  tariff  schedule 
relating  to  minerals  and  metallic  products  ;  but  they  are  em- 
phatically raw  materials,  the  question  of  principle  in  deal- 
ing with  such  was  hotly  raised  as  to  them.  The  two  houses 
of  Congress  here  disagreed  sharply :  the  House  put  both 
articles  on  the  free  list,  while  the  Senate  insisted  on  the  re- 
tention of  duties,  even  though  reduced  duties.  The  dispute 
drew  to  this  part  of  the  tariff  system  a  share  of  public  at- 
tention disproportionate  to  the  real  industrial  significance 
of  the  duties,  and  brought  into  full  relief  the  failure  of  the 
act  as  finally  passed  to  carry  out  with  steady  consistency 
the  Democratic  Party  policy. 

Free  coal  would  be  of  some  consequence  on  the  north 
Atlantic  coast  and  on  the  Pacific  coast.  Both  districts 
happen  to  be  far  from  the  domestic  sources  of  supply, 
and  comparatively  near  to  mines  across  the  border.  The 
Pacific  coast  got  coal  from  British  Columbia  and  from 
Australia,  and  felt  the  duty  on  coal  as  an  undesirable  bur- 
den. But  with  few  manufactures,  and  a  mild  climate,  the 
burden  was  not  a  serious  one.  In  New  England,  essen- 


THE    TARIFF  ACT  OF   1894.  299 

tially  a  manufacturing  community,  the  case  might  be  dif- 
ferent. Some  Canadian  mines  are  geographically  a  bit 
nearer  than  the  mines  of  West  Virginia  and  Virginia  which 
feel  their  competition.  It  was  a  question,  to  be  sure,  how 
serious  that  competition  would  be,  how  good  the  quality 
of  the  Canadian  coal  would  prove,  how  effectively  the 
transportation  of  this  coal  could  be  organized.  But  it  was 
difficult  to  give  any  good  reason  for  not  allowing  New 
England  every  opportunity  for  cheapening  its  supply  of 
coal.  The  opposition  to  the  repeal  of  the  duty  was  a 
clear  and  simple  case  of  an  attempt  of  certain  producers 
to  make  a  levy  on  consumers.  Coal  had  been  made  free 
by  the  House ;  the  act  left  it  subject  to  a  duty  of  forty 
cents  per  ton.  The  old  rate  had  been  seventy-five  cents. 
The  amendment  made  by  the  Senate  was  felt  in  all  quar- 
ters to  mean  a  conspicuous  failure  to  carry  out  consistently 
the  program  of  the  Democratic  Party. 

The  result  was  similar  with  the  duty  on  iron  ore.  The 
essential  facts  as  to  the  working  of  this  duty  have  already 
been  stated. '  Here  too  the  question  of  duty  or  no  duty 
was  immaterial  so  far  as  the  great  bulk  of  domestic  pro- 
duction and  consumption  was  concerned.  The  question 
was  simply  whether  certain  iron  and  steel  establishments 
near  the  seaboard  should  get  their  iron  ore  free,  or  should 
be  induced  by  a  duty  to  buy  domestic  ore  produced  at  a 
distance.  Directly,  the  issue  was  between  the  great  cor- 
porations which  mined  the  ore  in  the  West,  and  the  other 
great  corporations  which  had  iron  and  steel  plants  on  or 

1  See  above,  p.  271 


300  HISTORY  OF   THE  EXISTING    TARIFF. 

near  the  Atlantic  seaboard.  It  might  be  argued,  indeed, 
that  this  was  the  only  issue.  In  view  of  the  long  series 
of  producers  and  middlemen  whose  operations  must  inter- 
vene before  the  finished  product  of  industry  can  reach  the 
consumer,  still  more  in  view  of  the  hindrances  to  unfet- 
tered competition  among  the  middlemen,  it  might  be  plau- 
sibly maintained  that  not  only  the  immediate  question,  but 
the  ultimate  question,  was  between  two  sets  of  producers, 
not  between  the  producers  and  the  public.  But  here,  as  on 
many  other  questions,  it  is  safe  to  proceed  on  the  general 
ground  that  the  wider  the  sources  of  supply  and  the  cheaper 
the  raw  materials  of  production,  the  greater  the  chances 
that  the  benefits  will  filter  through  the  layers  of  middle- 
men, and  that  the  public  as  consumers  will  eventually  gain. 
Hence,  so  far  as  any  question  of  principle  was  concerned, 
everything  was  in  favor  of  free  ore.  Arguments  as  to  the 
development  of  struggling  industries  or  the  fostering  of  na- 
tional independence  could  not  be  to  the  point ;  since  the 
great  bulk  of  our  iron  ore,  and  the  great  bulk  of  our  iron  and 
steel,  were  sure  to  be  produced  within  the  country  under 
any  circumstances.  The  fate  of  the  iron-ore  duty  was  the 
same  as  that  of  the  coal  duty.  The  House  repealed  it ; 
the  Senate  restored  the  duty,  but  at  forty  cents  instead 
of  seventy-five  cents  per  ton.  Again  the  principle  of  free 
raw  materials  was  set  aside. 

The  duty  on  pig  iron  was  brought  down  in  the  act  from 
$6.72  to  $4  a  ton.  In  the  House  of  Representatives  the 
duty  had  been  made  twenty  per  cent.,  which  would  have 
meant  a  much  more  considerable  reduction  on  most  quali- 


THE    TARIFF  ACT  OF  1894.  3<DI 

ties  of  iron.  Twenty  years  earlier,  even  ten  years  earlier, 
such  a  change  as  was  proposed  by  the  House  would  have 
been  of  great  importance :  even  that  enacted  would  have 
been  of  moment.  As  matters  stand  in  the  closing  years 
of  the  century,  the  reduction  did  not  signify  much.  The 
production  of  crude  iron  advanced  at  an  enormous  rate 
after  1880.  With  the  discovery  of  new  sources  of  supply, 
with  improvements  in  production  and  transportation,  the 
great  bulk  of  the  iron  would  be  produced  at  home,  even 
if  there  were  no  duties  at  all.  Some  parts  of  the  Atlantic 
and  Pacific  seaboards,  which  are  distant  from  the  domestic 
centres  of  production,  would  import  iron,  if  free  of  duty, 
rather  than  buy  it  at  home.  But  in  the  main,  the  days 
in  which  the  duty  on  pig  iron  could  exercise  very  wide 
reaching  effects,  were  gone  by.  The  change  made  in 
1894  encountered  little  opposition,  because  it  could  be  no 
longer  of  great  effect. 

The  duty  on  steel  rails,  that  old  bone  of  contention, 
was  lowered  from  $13.44  to  $7.84  itfSn.  From  1883  to 
1894,  each  tariff  act  had  taken  a  slice  from  this  duty  :  each 
time  in  such  manner  that  no  direct  effect  was  felt  on 
prices,  the  decline  in  the  duty  following  and  not  preced- 
ing the  decline  in  prices.  The  steady  fall  in  the  prices  of 
iron  and  steel  products  during  the  past  generation  has 
been  due  to  a  variety  of  causes.  Partly  they  have  been  of 
world-wide  operation,  bringing  about  a  tendency  to  lower 
iron  prices  in  all  countries ;  partly  they  have  been  of  spe- 
cial effect  in  this  country,  in  the  discovery  of  new  sources 
of  supply,  and  their  utilization  through  great  improve- 


3O2  HISTORY  OF  THE  EXISTING   TARIFF. 

ments  in  transportation.  No  small  factor  has  been  the 
remarkable  application  of  American  enterprise,  invention, 
and  engineering  skill  to  the  production  on  a  vast  scale  of 
Bessemer  ore,  Bessemer  iron,  and  Bessemer  steel.  Through 
it  all,  the  prices  of  steel  and  of  steel  rails  have  been  steadily 
higher  than  they  would  have  been  without  a  duty  ;  and 
the  tariff  system  has  contributed  to  the  maintenance  of 
monopoly  profits.  The  lowering  of  the  duty  on  steel 
rails  in  1894,  like  the  earlier  reductions,  had  no  immediate 
results,  the  duty  being  still  left  at  the  prohibitory  point. 
But,  as  in  the  case  of  previous  reduction,  the  lower  rate 
set  a  limit  to  possible  future  advance  in  prices.  Nothing 
could  have  been  lost,  and  something  would  probably  have 
been  gained,  by  a  more  incisive  change.1 

On  one  other  much  disputed  article  a  change  was  made, 
of  greater  practical  importance  than  in  the  case  of  steel 
rails,  but  again  of  less  extent  than  might  have  been  ex- 
pected.    The  duty  on  tin-plate  was  reduced  to  exactly 
\.  one-half  that  which  had  been  levied  in  the  act  of  1890:  it 

had  been  2J-  cents  per  pound,  and  it  was  made  \\  cents. 
The  reduced  duty  is  still  higher  than  that  in  force  before 
1890;  so  that  here  again  the  legislation  of  that  year  was 
allowed  to  leave  its  mark  on  the  statute-book. 

In  most  of  these  cases  specific  duties  were  retained  by 
the  Senate,  in  place  of  the  ad-valorem  duties  which  had- 
been  adopted  by  the  House.      In   some  cases,  it  is  true, 

1  I  have  given  an  extended  description  of  the  growth  of  the  iron  industry 
since  1870,  and  an  analysis  of  the  working  of  protection,  in  two  articles  in 
the  Quarterly  Journal  of  Economics,  February  and  August,  1900. 


THE   TARIFF  ACT  OF  1894.  303 

the  Senate  simply  raised  the  ad-valorem  rates  which  the 
House  proposed ;  and  here  the  outcome  was  usually  a 
substantial  reduction  from  the  old-specific  rates.  Thus 
the  duties  on  chains,  guns,  and  some  sorts  of  cutlery  re- 
mained in  ad-valorem  form,  and  were  considerably  lowered. 
The  general  retention  of  specific  duties  by  the  Senate  was 
among  the  changes  which  most  disappointed  the  advo- 
cates of  lower  duties ;  and  this  for  the  simple  reason  that 
it  was  made  the  occasion  for  higher  rates  than  had  been 
proposed  in  the  other  form.  So  far  as  the  direct  question 
of  administrative  advantage  goes,  everything  speaks  in 
favor  of  specific  duties ;  and  our  tariff  reformers  have 
usually  been  curiously  blind  to  the  difficulties  inevitable 
in  the  collection  of  ad-valorem  duties.  But  these  latter 
have  the  unquestionable  advantage  of  telling  their  own 
tale.  What  the  meaning  and  effect  of  a  specific  duty  is, 
can  often  be  known  only  to  a  few  persons  familiar  with 
the  details  of  some  minute  branch  of  trade.  In  fixing 
them,  the  legislator  necessarily  seeks  the  advice  of  ex- 
perts, who  are  likely  enough  to  have  wishes  and  interests 
opposed  to  those  of  the  public.  Wittingly  and  unwit- 
tingly, these  duties  have  often  been  arranged  in  a  manner 
to  promote  the  interests  of  particular  enterprises,  and  so 
to  justify  the  charge  that  they  tax  the  many  for  the  bene- 
fit of  the  few.  Hence  the  natural  repugnance  of  those 
who  are  opposed  to  the  principle  of  protection ;  hence 
their  disappointment  when  the  comparatively  simple 
scheme  of  ad-valorem  duties  adopted  in  the  House  was 
transformed  by  the  Senate  into  a  system  of  specific 


304  HISTORY  OF   THE  EXISTING   TARIFF. 

duties  intricate,  bewildering,  and  not  unfairly  open  to 
suspicion. 

Among  other  manufactured  articles,  earthen-ware  and 
china-ware  were  dealt  with  least  tenderly.  Here  it  is  some- 
what surprising  to  find  a  real  and  effective  change  in  the 
duty.  Finer  qualities  of  china-ware  went  down  from  sixty 
to  thirty-five  per  cent.,  the  cheaper  qualities  from  fifty  to 
thirty  per  cent.  The  finer  qualities  had  always  been 
imported  in  very  considerable  quantities  ;  it  was  very 
possible  that  under  the  reduced  duty  large  quantities  of 
the  cheaper  grades  might  also  be  imported.1  On  what 
principle  these  articles  should  have  been  selected  for 
special  reduction,  it  is  difficult  to  say  ;  but  certainly  there 
was  here  a  substantial  change.  Glassware  of  all  sorts 
remained  very  much  as  it  was. 

Questions  in  many  ways  different  from  those  which 
arose  with  regard  to  manufactures  and  raw  materials, 
were  presented  by  the  duty  on  sugar.  That  article  came 
into  sudden  and  surprising  prominence  in  the  debates  of 
1894.  It  is  true  that  it  had  played  an  important  part  in 
1890,  when  the  remission  of  duty  on  raw  sugar  had  been 
an  essential  part  of  the  general  policy  of  the  McKinley 
tariff  act.  But  attention  had  then  been  given  mainly  to 
the  burden  which  the  tax  on  raw  sugar  imposed  on  con- 
sumers, and  to  the  benefits  which  its  remission  would 
bring  to  them.  In  1894,  however,  the  tax  on  refined 
sugar,  and  its  effect  on  the  sugar-refining  industry, 

1  See  what  is  said  of  earthen-ware  and  china-ware  in  my  paper  in  the 
Quarterly  Journal of Economics \  vol.  Hi.,  p.  286. 


THE    TARIFF  ACT  OF  1894.  305 

received  the  greater  share  of  attention.  This  change  in 
the  point  of  view  was  due  to  the  fact  that  between  the 
two  dates  the  monopoly  conditions  in  the  refining  of  sugar 
had  become  a  matter  of  common  knowledge.  Hence 
the  question  of  protection  as  fostering  monopoly  was 
brought  home  to  the  public,  uneasy  at  best  at  the  de- 
velopment apparently  on  all  sides  of  combinations  and 
trusts. 

The  sugar  duty,  in  its  various  forms,  involved  a  great 
variety  of  economic  and  social  questions.  That  on  raw 
sugar  involved  both  fiscal  questions  and  questions  as  to 
the  social  effects  of  taxation.  That  on  refined  sugar  pre- 
sented at  once  a  phase  of  the  protective  controversy  and 
a  phase  of  the  new  and  portentous  problem  of  monopoly 
combinations.  It  will  be  advantageous  to  consider  sepa- 
artely  the  very  different  questions  presented  by  the  two 
parts  of  the  sugar  tax. 

The  reasons  for  and  against  a  duty  on  raw  sugar  in  1894 
may  be  summarized  thus.  In  favor  of  the  duty  it  was  to  be 
said  that  it  would  yield  at  once  a  large,  certain,  steady  reve- 
nue. Some  increase  in  the  revenue  was  agreed  on  all 
hands  to  be  necessary.  No  one  change  in  the  McKinley 
act  had  done  so  much  to  upset  the  federal  budget  as  the 
removal  of  the  duty  on  sugar,  and  no  one  change  was  so 
certain  to  bring  an  additional  revenue  as  the  re-imposition 
of  this  tax.  In  view  of  the  position  of  the  federal  Treas- 
ury as  the  holder  of  the  metallic  reserve  for  virtually  all 
the  paper  money  outstanding,  it  was  of  prime  importance 
to  put  it  in  a  secure  financial  position.  . 


306  HISTORY  OF  THE  EXISTING   TARIFF. 

Next,  while  the  sugar  duty  is  a  tax,  it  was  in  1894  (set- 
ting aside  the  comparatively  small  domestic  production  of 
sugar)  a  simple  tax,  bringing  none  of  the  diversion  of 
domestic  industry  and  none  of  the  ulterior  consequences 
which  flow  from  protective  duties.  It  is  commonly  as- 
serted by  Protectionists  that  a  remission  of  revenue 
duties,  like  those  on  tea,  coffee,  and  sugar,  is  in  a  peculiar 
sense  a  remission  of  taxation  ;  the  implication  being  that 
protective  duties  on  commodities  made  at  home  are  not 
really  taxes,  but  in  some  roundabout  way  are  pure  gain. 
It  would  be  the  part  of  courage  and  honesty  for  those  op- 
posed to  protection  to  act  on  the  ground  that,  while  both 
alike  are  taxes,  the  revenue  duties  are  the  less  burden- 
some and  the  less  harmful  of  the  two.  They  should, 
therefore,  where  opportunity  arises,  maintain  revenue 
duties  boldly  and  remit  protective  duties  freely.  As 
between  duties  on  raw  wool,  coal,  and  iron  ore  on  the 
one  hand,  and  a  duty  on  sugar  on  the  other,  the  party 
opposed  to  the  principle  of  protection  should  unhesitat- 
ingly have  chosen  the  latter. 

Thirdly,  the  Louisiana  sugar  producers  were  fairly  en- 
titled to  some  consideration.  Unlike  wool-growing,  their 
industry  involved  a  considerable  plant ;  and  it  offered  no 
easy  opportunity  for  a  change  to  something  else.  An  im- 
mediate abolition  of  the  duty,  or  of  the  equivalent  bounty 
which  had  been  granted  in  1890,  would  unquestionably 
work  hardship  to  them.  In  view  of  the  tenderness  with 
which  most  of  the  protected  industries  were  treated,  they 
might  reasonably  complain  of  any  sudden  and  uncondi- 


THE    TARIFF  ACT  OF   1894.  307 

tional  withdrawal  of  the  aid  which  they  had  had  for  gen- 
erations. 

The  strong  argument  against  the^duty  on  raw  sugar  is 
that  which  bears  against  almost  all  indirect  taxes  produc- 
tive of  a  large  revenue.  To  be  productive,  such  taxes 
must  be  imposed  on  articles  of  wide  consumption ;  and 
articles  of  wide  consumption  are  always  of  the  sort  con- 
sumed proportionately  more  by  the  poor  than  by  the  rich. 
The  tax  is  socially  unjust.  The  full  weight  of  this  objec- 
tion can  be  fairly  judged,  to  be  sure,  only  on  a  considera- 
tion of  the  incidence  of  an  entire  system  of  taxation, — 
in  the  present  case,  not  only  of  the  federal  taxes,  but  of 
the  State  and  local  taxes  as  well.  It  might  conceivably 
be  maintained  that  the  State  and  local  taxes,  which  are 
chiefly  direct,  serve  to  offset  the  injustice  of  an  indirect 
tax  like  the  sugar  duty.  They  are  levied  in  the  first  in- 
stance chiefly  on  the  well-to-do ;  and  though  their  ultimate 
incidence  is  in  the  highest  degree  complex,  it  is  at  least 
doubtful  whether  they  bear  with  proportional  weight  on 
those  classes  in  the  population  which  would  be  most 
affected  by  a  duty  on  sugar.  It  is  probable,  too,  that 
other  parts  of  the  tariff  schedule,  notably  the  duties  on 
textiles,  bear  most  heavily  on  commodities  consumed  by 
the  richer  classes.  But  a  comprehensive  inquiry  of  this 
sort  would  almost  certainly  fail  of  a  satisfactory  conclu- 
sion;  and  it  is  inevitable  that  Congress  should  have  an 
eye  solely  to  the  federal  taxes  which  are  under  its  control. 
Here  there  is  the  clear  social  injustice  of  a  sugar  duty, 
considered  per  se.  Add  to  this  its  visible  and  unmistak- 


308  HISTORY  OF   THE  EXISTING    TARIFF. 

able  payment  by  consumers,  and  the  pressure  against  it 
in  a  democratic  community  becomes  formidable. 

The  conflict  between  sober  counsels  in  favor  of  the  pro- 
ductive revenue  duty,  and  popular  suspicion  of  its  effects 
in  aggravating  inequalities  in  taxation  and  so  in  the  dis- 
tribution of  wealth,  was  emphasized  by  the  income  tax 
proposal.  Obviously  the  income  tax,  which  was  made  a 
part  of  the  tariff  act  of  1894,  was  precisely  what  the  sugar 
duty  was  not.  The  revenue  from  it  was  uncertain  in 
amount,  and  in  any  case  would  come  in  but  slowly,  afford- 
ing no  prompt  relief  to  the  Treasury.  Moreover,  levied 
as  it  was  only  on  incomes  exceeding  $4000  a  year,  it  was 
a  tax  on  the  rich  alone,  and  thus  precisely  the  opposite  in 
social  effect  from  the  sugar  tax.  The  income  tax  was 
popular  in  the  South  and  West,  where  it  was  most 
strongly  felt  that  the  burden  of  taxation  did  not  bear 
sufficiently  on  the  rich,  and  where  the  strength  of  the 
Treasury  was  a  matter  of  indifference,  not  to  say  hos- 
tility ;  while  the  sugar  tax  (barring  the  exceptional  case 
of  Louisiana)  was  strongly  opposed  in  those  regions. 

Curiously  enough,  the  outcome  of  the  action  of  Con- 
gress was  that  both  of  these  taxes  were  put  into  opera- 
tion. In  the  bill  as  passed  by  the  House,  sugar  had  been 
made  free,  and  the  bounty  abolished.  But  in  the  Senate 
the  two  Louisiana  Senators  were  among  those  whose 
votes  were  needed  if  the  tariff  bill  was  to  pass  that 
branch,  and  they  insisted  on  some  concession  to  their 
constituency.  The  Administration,  anxious  for  a  sub- 
stantial balance  in  the  right  direction  at  the  Treasury, 


THE    TARIFF  ACT  OF  1894.  309 

also  brought  its  influence  to  bear  in  favor  of  the  sugar 
duty.  Consequently  it  was  inserted  by  the  Senate ; 
while  the  income  tax,  which  in  the  House  had  been  in  a 
manner  a  substitute  for  it,  was  also  regained  in  the  Senate. 
Later,  the  decision  of  the  Supreme  Court  as  to  the  un- 
constitutionally of  the  income  tax  as  levied  by  the  act, 
wiped  out  that  part  of  the  measure,  and  left  the  duty  on 
raw  sugar  without  an  offset,  to  the  bitter  disappointment 
of  those  who  had  opposed  both  this  tax  in  itself  and  the 
tax  on  refined  sugar  which  it  brought  in  its  train. 

As  it  became  law,  the  act  imposed  a  duty  on  raw  sugar 
of  forty  per  cent,  ad  valorem.  The  bounty  of  1890  was 
abolished.  The  new  duty  was  equivalent  roughly  to  one 
cent  a  pound,  or  about  one-half  the  duty  in  force  before 
1890,  and  one-half  the  bounty  granted  in  that  year.  Its 
ad-valorem  form  was  peculiar.  Never  before,  except 
under  the  general  policy  of  ad-valorem  rates  in  the  acts 
of  1846  and  1857,  had  sugar  been  subjected  to  any  other 
than  a  specific  duty.  The  form  now  adopted  served  to 
cut  a  Gordian  knot :  it  was  a  short  cut  out  of  the  difficul- 
ties which  were  met  in  the  endeavor  to  arrange  varying 
rates  on  different  grades  of  raw  sugar  in  such  manner  as 
to  satisfy  both  the  Treasury  officials,  the  sugar  producers, 
and  the  refiners.  It  connects  itself  with  the  discussion  of 
the  extra  rate  on  refined  sugar :  to  which  we  may  now 
turn. 

The  salient  facts  as  to  the  sugar  refiners  and  their  rela- 
tions to  the  tariff  system  were  simple  and  familiar.  Sugar 
refining  had  been,  almost  as  a  matter  of  course,  within 


310  HISTORY  OF   THE  EXISTING    TARIFF. 

the  protective  pale,  and  had  been  aided  by  a  duty  on  re- 
fined  higher  than  that  on  raw  sugar.  The  policy  of  dis- 
criminating in  this  way  in  favor  of  the  domestic  refiners 
would  probably  not  have  been  questioned,  except  in  the 
matter  of  degree,  had  it  not  been  for  the  development  of 
monopoly  conditions  in  the  industry  by  the  formation  of 
the  Sugar  Trust,  which  later  grew  to  be  the  American 
Sugar  Refining  Company,  still  popularly  known  as  the 
Trust.  This  put  a  new  phase  on  the  matter  in  the  public 
eye,  the  more  so  as  the  sugar  combination  had  been  one  of 
the  first  among  the  trusts,  and  had  been  more  prominently 
before  the  community  than  any  other.  The  more  ardent 
free-traders  have  always  contended  that  protective  duties 
are  the  chief  cause  of  combinations  and  monopolies,  or 
trusts.  It  needs  no  great  acquaintance  with  economic 
history,  and  no  great  skill  in  general  reasoning,  to  show 
that  the  tendency  to  combination  has  deeper  causes  than 
protective  legislation,  and  presents  problems  more  com- 
plicated, and  in  their  social  importance  more  weighty, 
than  those  involved  in  the  tariff  controversy.  But  it  is 
undoubtedly  true  that  in  some  cases  the  drift  toward 
monopoly  conditions  has  been  promoted  by  favoring 
duties.  Sugar  refining  happened  to  be  a  case  of  mo- 
nopoly familiar  to  all  the  world  ;  the  monopoly  in  this  case 
had  in  fact  been  both  easier  to  bring  about  and  a  source 
of  greater  profit,  because  of  the  protective  duty;  while 
the  nature  of  the  article  made  a  tax  in  favor  of  the  mono- 
poly producer  particularly  odious. 

With  all  sugar  free,  whether  raw  or  refined,  the  Ameri- 


THE    TARIFF  ACT  OF   1894.  311 

can  refiner  would  be  at  some  slight  disadvantage,  since 
freights  would  amount  to  a  trifle  more  on  raw  sugar  than 
on  the  less  bulky  refined  sugar  which  might  have  been 
imported  from  foreign  quarters.  But  this  disadvantage 
would  be  insignificant.  Hence  when  the  House  passed 
the  tariff  bill  with  both  raw  and  refined  sugar  free  of 
duty,  it  practically  left  the  refining  monopoly  to  stand  on 
its  own  legs,  neither  helped  nor  substantially  hindered  by 
the  tariff.  When,  however,  a  duty  on  sugar  was  resolved 
on  in  the  Senate,  the  difficult  question  at  once  was  raised 
how  to  adjust  the  rate  on  refined  sugar  to  that  on  the 
crude  form.  A  level  duty,  at  the  same  rate  on  raw  and 
on  refined,  would  put  the  refiners  to  some  real  disadvan- 
tage. From  100  pounds  of  raw  sugar  something  less  (95 
to  98)  of  refined  sugar  is  obtained,  and  a  level  duty  would 
operate  distinctly  to  the  advantage  of  the  foreign  refiner. 
Hence,  if  a  revenue  duty  were  imposed  on  raw  sugar,  and 
if  it  were  desired  to  treat  the  refiners  with  absolute  indif- 
ference, a  slight  additional  duty  should  be  put  on  refined. 
Exactly  how  great  this  additional  duty  should  fairly  be, 
it  was  not  easy  to  calculate.  The  data  for  the  calculation 
must  come  chiefly  from  the  refiners  ;  and  any  figures  fur- 
nished by  them  must  be  received  with  caution.  But  a 
very  small  difference  would  suffice  to  prevent  refiners 
from  having  any  ground  for  complaint.  If  a  duty  of  one 
cent  a  pound  were  put  upon  raw  sugar,  an  additional  duty 
of  one-twentieth  of  a  cent  would  be  ample  to  offset  the 
loss  in  weight  on  refined  sugar  made  from  the  dutiable 
raw  sugar. 


312  HISTORY  OF   THE  EXISTING    TARIFF. 

Naturally,  the  sugar  refiners  wanted  something  more 
than  bare  equality.  They  wanted  a  continuance  of  the 
favors  which  the  legislature  had  granted  them  for  genera- 
tions in  the  past.  In  1890,  when  raw  sugar  had  been 
admitted  free,  refined  sugar  had  been  subjected  to  a  duty 
of  one-half  a  cent  per  pound.  It  is  probable  that  the 
processes  of  refining  are  carried  on  at  least  as  cheaply 
in  the  United  States  as  in  any  foreign  country,  and  that 
even  without  any  protection  at  all  the  sugar-refining  in- 
dustry could  maintain  itself,  and  the  sugar  monopoly 
make  handsome  profits.  With  a  barrier  against  foreign 
competitors  such  as  the  tariff  of  1890  gave,  the  profits 
were  enormous.  It  was  inevitable  that  great  efforts 
should  be  made  to  preserve  them. 

Briefly,  the  changes  which  the  sugar  schedule  under- 
went during  the  session  were  as  follows.  In  the  tariff 
bill  as  first  reported  to  the  House  by  the  Committee  of 
Ways  and  Means,  raw  sugar  was  left  free,  and  a  duty  of 
one-quarter  of  a  cent  per  pound  was  put  on  refined  sugar. 
In  other  words,  the  largess  given  to  the  monopoly  by  the 
act  of  1890  was  to  be  reduced  one-half.  In  the  House, 
however,  the  feeling  was  in  favor  of  a  more  radical  change. 
The  provision  for  a  duty  on  refined  sugar  was  struck  out ; 
and  all  sugar,  raw  and  refined,  was  put  on  the  free  list,  so 
depriving  the  trust  of  all  legislative  favors.  In  the  Senate, 
the  finance  committee  amended  the  sugar  schedule  by 
imposing  specific  duties  on  raw  sugar,  roughly  at  the  rate 
of  one  cent  per  pound,  with  an  additional  duty  of  one- 
eighth  of  one  cent  per  pound  on  refined  sugar.  The  duty 


THE    TARIFF  ACT  O?  1894.  313 

on  raw  sugar  was  inserted  partly  to  gain  revenue,  partly 
to  secure  the  votes  of  the  Louisiana  Senators  for  the  bill. 
But  when  final  action  came  to  be  taken  in  the  Senate,  still 
another  change  was  made.  The  'duty  on  raw  sugar  was 
changed  from  specifice  to  ad  valorem,  and  was  made  forty 
per  cent.  Over  and  above  this,  the  duty  of  one-eighth  of 
one  cent  on  refined  sugar  was  retained.  Still  further,  a 
provision  which  had  been  introduced  into  the  tariff  act  of 
1890  was  also  retained,  by  which  an  extra  duty  of  one- 
tenth  of  a  cent  per  pound  was  imposed  on  refined  sugar 
coming  from  countries  that  gave  an  export  bounty.  In 
this  form  the  sugar  schedule  was  passed  by  the  Senate, 
had  finally  to  be  accepted  by  the  House,  and  so  became 
law.  The  final  outcome  was  more  than  satisfactory  to 
the  Sugar  Trust.  There  was  the  duty  of  one-eighth  of  a 
cent  on  refined  sugar ;  and  there  was  an  extra  one-tenth 
of  a  cent  on  refined  sugar  coming  from  those  continental 
countries,  especially  Germany,  which  give  an  export 
bounty,  and  whose  competition  was  alone  to  be  seriously 
dreaded.  The  ad-valorem  form  of  the  duty  was  also 
advantageous,  bearing  as  it  did  less  heavily  on  lower 
grades  of  sugar  than  on  higher.1  On  the  whole,  the  re- 

1  Ad-valorem  duties  are  assessed  on  the  value  of  the  imported  commodities 
at  the  time  and  place  of  purchase.  Raw  sugar  comes  largely  from  distant 
countries,  or  from  countries  with  which  transportation  is  not  highly  organ- 
ized, as  from  Cuba,  Java,  Brazil,  and  the  Hawaiian  Islands.  The  value  at 
the  place  of  purchase  is  comparatively  low,  and  freight  is  comparatively 
high.  On  the  other  hand,  refined  sugar  would  be  imported,  if  at  all,  only 
from  the  more  advanced  European  countries.  Freight  charges  from  these 
are  low,  and  the  value  at  the  time  and  place  of  purchase  does  not  differ  very 
greatly  from  the  value  at  the  American  ports.  Virtually,  therefore,  the  ad' 


3 14  HISTORY  OF  THE  EXISTING   TARIFF. 

fining  monopoly,  while  it  lost  something,  came  out  of  the 
struggle  victorious,  and  was  left  in  little  less  secure  con- 
trol over  the  trade  under  the  act  of  1894  than  under  the 
act  of  1890. 

Much  was  said  during  the  session  and  after  the  session 
of  influences  brought  to  bear  by  the  trust  on  certain 
Senators.  An  investigation  held  during  the  course  of  the 
session  brought  out  some  facts  freely  suspected  before, 
and  not  creditable  to  our  political  life.  It  was  admitted 
that  the  trust  had  made  contributions  to  the  chests  of 
both  political  parties,  although  nominally  to  the  State 
organizations  only.  No  bargains  are  ever  made  in  these 
too  familiar  cases,  but  it  is  expected  and  understood  that 
what  is  called  "  fair  consideration  "  will  be  given  to  the 
interests  of  the  obliging  donor.  It  was  proved  also  that 
some  Senators  had  speculated  in  sugar  stock.  No  pro- 
test as  to  the  absence  of  connection  between  such  dealings 
and  the  legislator's  vote  can  save  them  from  the  taint  of 
dishonor.  It  would  appear  also  that  the  success  of  the 
trust  was  promoted  by  the  position  of  the  Louisiana 
Senators,  who  were  anxious  to  secure  a  duty  on  raw 
sugar,  and  who  seem  to  have  entered  into  some  sort  of 
bargain  for  supporting  the  higher  duty  on  refined  sugar 
in  exchange  for  aid  to  their  own  efforts. 

In  any  case  it  is  clear  that  the  sort  of  manipulation  by 
which  the  refiners  succeeded  in  retaining  their  favors  from 

valorem  duty  is  less  heavy  on  raw  sugar  than  on  the  refined,  and  so  yields  to 
the  refining  monopoly  an  advantage,  not  easy  to  calculate,  yet  probably  sub- 
stantial. It  is  certain  that  this  form  of  duty  was  advocated  by  the  represen- 
tatives of  the  trust — in  itself  a  reasonable  ground  for  suspicion. 


THE   TARIFF  ACT  OF  1894.  315 

the  tariff  was  possible  only  because  of  the  narrow  majority 
which  the  Democrats  had  in  the  Senate.  Where  one  or 
two  votes  would  have  sufficed  to  block  the  whole  measure, 
the  opportunity  for  dishonest  or  selfish  pressure  on  legis- 
lation was  easy.  It  is  possible  to  bribe  or  convince  or 
entangle  a  few  legislators,  and  so  bring  them  to  throw  to 
the  winds  party  consistency  and  public  justice  ;  but  for- 
tunately our  conditions  are  not  so  corrupt  as  to  make  it 
possible  to  bribe  a  whole  party  or  overturn  a  strong 
majority.  In  the  House,  where  the  Democratic  majority 
was  greater,  the  manipulation  of  sugar  duties  was  impos- 
sible. It  was  in  the  Senate,  where  a  change  of  one  or  two 
votes  meant  failure  to  the  whole  measure,  that  the  un- 
savory result  was  achieved. 

No  part  of  the  tariff  legislation  of  1894  was  more  dis- 
appointing to  those  who  were  earnest  in  their  advocacy 
of  tariff  reform  than  the  outcome  of  the  sugar  imbroglio. 
None,  too,  did  more  to  damage  the  prestige  of  the 
Democrats.  They  had  posed  as  the  champions  of  the 
public  against  the  monopoly  ;  yet  the  trust  had  conquered. 
It  is  true  that  the  extra  duty  on  refined  sugar — the  part 
of  the  schedule  which  alone  was  of  real  advantage  to  the 
trust — was  less  than  it  had  been  in  1890,  and  that  the  pub- 
lic in  reality  was  better  off  than  it  had  been  before.  But 
the  intricacies  of  the  case  were  too  complicated  to  be  readily 
understood  by  the  average  voter.  The  imposition  of  any 
duty  at  all  on  sugar  was  probably  thought  to  be  a  surren- 
der to  the  trust.  The  revenue  tax  on  raw  sugar,  fairly 
open  to  objection  on  grounds  of  social  injustice,  was  sup- 


3l6  HISTORY  OF   THE  EXISTING   TARIFF. 

posed  in  many  quarters  to  be  much  more  objectionable, 
— to  be  levied  in  toto  for  the  benefit  of  the  monopolists. 
The  effect  of  a  simple  sweeping  away  of  all  duties  on 
sugar,  whether  raw  or  refined,  would  have  been  transpar- 
ent to  the  popular  mind  ;  but  the  impression  left  by  the 
long  and  unsuccessful  struggle,  and  the  complicated  out- 
come, was  mainly  that  the  promises  of  the  Democrats  had 
not  been  kept. 

No  doubt  the  strong  feeling  which  the  surrender  to  the 
sugar  monopoly  aroused  rested  largely  on  a  blind  opposi- 
tion to  combinations  in  general,  and  to  the  corporations 
which  are  supposed,  rightly  or  wrongly,  to  have  a  monop- 
oly position.  Whether  the  tendency  to  combination  is  to 
be  welcomed  or  regretted,  has  not  often  been  soberly  con- 
sidered by  the  American  public.  The  usual  assumption 
is  that  it  is  an  unquestionable  evil,  to  be  fought  in  every 
way  by  legislation.  That  disposition  which  shows  itself, 
both  among  the  welcomers  of  socialism  and  among  many 
critical  economists,  to  accept  combinations  and  consolida- 
tions and  to  use  them  as  instruments  of  social  reform,  finds 
hardly  an  echo  in  the  United  States.  Doubtless  the 
popular  instinct  here  is  right.  The  drift  to  consolidation 
and  monopoly  presents  problems  with  which  a  democratic 
community  can  deal  only  under  great  disadvantages.  To 
regulate  it,  to  use  it,  to  secure  from  it  the  possible  bene- 
fits, requires  a  degree  of  nicety  and  consistency  in  legisla- 
tion which  our  American  communities  could  reach  only 
by  slow  and  arduous  steps.  Legislation  to  check  consoli- 
dation may  be  unwise,  and  probably  is  futile ;  but  legis- 


THE    TARIFF  ACT  OF  1894.  317 

lation  directed  to  encourage  it,  still  more  legislation  to 
augment  the  profits  of  a  monopoly,  is  surely  of  the 
worst. 

The  revulsion  against  the  extreme  protective  system 
which  showed  itself  in  the  elections  of  1890  and  1892  was 
probably  in  a  large  degree  a  consequence  of  the  popular 
feeling  just  described.  While  the  essential  question  as  to 
protective  duties  is  comparatively  simple,  the  intricate 
reasoning  which  is  needed  to  follow  the  effects  of  such 
duties  into  all  the  ramifications  of  international  and  domes- 
tic trade  can  have  but  little  influence  on  the  average 
citizen.  He  reasons  from  few  premises,  and  is  affected 
by  simple  catch-words.  The  outcry  against  trusts  and 
monopolies,  though  in  fact  it  describes  an  exception  rather 
than  the  normal  working  of  protective  duties,  was  proba- 
bly the  most  effective  argument  in  bringing  about  the 
public  verdict  against  the  McKinley  act.  It  is  expressive 
of  the  general  feeling  of  unrest  as  to  the  power  of  great 
corporations,  the  growth  of  plutocracy,  the  gulf  between 
the  few  very  rich  and  the  masses  of  comparatively  poor, 
which  is  becoming  a  stronger  and  stronger  political  force, 
and  is  destined  in  the  future  to  have  larger  and  larger 
effect  on  legislation. 

It  is  clear  that  the  new  tariff  act  made  no  deep-reach- 
ing change  in  the  character  of  our  tariff  legislation.  The 
one  exception  was  the  removal  of  the  duty  on  wool. 
Barring  this,  there  was  simply  a  moderation  of  the  pro- 
tective duties.  A  slice  was  taken  off  here,  a  shaving 
there  ;  but  the  essentially  protective  character  remained. 


318  HISTORY  OF   THE  EXISTING   TARIFF. 

This  would  have  been  the  case  even  had  the  Wilson  Bill, 
as  originally  proposed  to  the  House  or  as  passed  by  that 
body,  become  law.  That  less  anxiously  conservative 
measure  was  of  course  alleged  by  its  opponents  to  por- 
tend ruin  to  American  manufacturers  and  prostration  to 
American  labor.  In  fact,  while  it  might  have  affected 
some  industries,  it  would  have  caused  no  considerable 
disturbance  of  industry  and  no  considerable  rearrange- 
ment  of  the  productive  forces  of  the  nation.  The  act  as 
finally  passed  was  even  less  potent  for  good  or  for  evil. 
In  not  a  few  cases,  the  duties,  while  lower  than  those 
enacted  in  the  McKinley  act  of  1890,  were  still  higher 
than  under  the  tariff  act  of  1883.  As  far  as  it  went,  it 
began  a  policy  of  lower  duties ;  but  most  of  the  steps  in 
this  direction  were  feeble  and  faltering. 

Whether  such  a  measure  be  good  or  bad,  must  be 
decided  in  the  main  on  general  principles.  To  follow  out 
its  influence  on  the  prosperity  of  the  community  requires 
time  for  the  observation  of  effects,  and  great  skill  and 
caution  in  the  interpretation  of  industrial  phenomena. 
Even  had  the  new  legislation  been  much  more  drastic,  its 
final  effects  on  general  welfare  could  have  shown  them- 
selves only  after  the  lapse  of  a  considerable  period,  and 
then  might  easily  have  been  concealed  or  obscured  by  the 
operation  of  other  causes.  To  judge  a  very  moderate 
measure  like  that  of  1894  by  its  visible  fruits  is  so  difficult 
as  to  touch  the  bounds  of  the  impossible.,  The  effects  on 
any  particular  industry, — which  are  but  a  fragmentary  bit 
of  evidence  as  to  the  promotion  of  general  prosperity,— 


THE    TARIFF  ACT  OF  1894.  319 

are  sufficiently  difficult  to  trace.  We  have  seen  how  the 
one  radical  change  made  by  the  act,  in  abolishing  the 
duty  on  wool,  required  time  to  show  how  it  might  affect 
the  wool  and  woollen  industry,  fcven  after  the  lapse  of 
time,  there  could  hardly  be  such  an  unmistakable  result 
one  way  or  the  other  as  to  prevent  doubt  and  dispute. 
When  all  the  evidence  on  this  point  was  in,  it  could  still 
be  of  little  avail  toward  answering  the  fundamental 
question, — whether  the  productive  forces  of  the  com- 
munity were  applied  to  better  effect  with  a  low  tariff  than 
without  it. 

But  the  general  public  has  been  taught  to  expect 
immediate,  almost  magical  effects.  Both  parties  in  the 
protective  controversy  have  preached  the  same  gospel,  and 
made  the  same  promises.  For  high  duties  and  for  low 
duties  alike  it  has  been  claimed  that  they  would  convert 
depression  into  prosperity.  This  has  been  the  case,  in 
more  or  less  degree,  throughout  our  tariff  history ;  and 
the  inevitable  disappointment  with  the  expectations  so 
raised  has  had  its  effect  in  bringing  about  the  vacillations 
in  public  feeling  and  the  frequent  changes  in  policy.  The 
act  of  1894  was  defended  and  attacked  on  the  same 
superficial  grounds ;  and  it  happened  to  suffer  from  the 
contingencies  of  the  moment.  It  went  into  effect  shortly 
after  an  acute  commercial  crisis,  and  in  the  worst  stage 
of  a  period  of  severe  depression.  The  crisis  and  the  de- 
pression, were  due,  in  this  case  as  in  all  others,  to  a  long 
and  complex  set  of  causes,  some  of  them  still  obscure 
even  to  the  best  informed  and  most  skilled  observers. 


320  HISTORY  OF   THE  EXISTING   TARIFF. 

That  the  tariff  act  played  any  serious  part  in  bringing 
them  about,  would  not  be  maintained  by  any  cool  and 
competent  critic.  But  the  great  mass  of  the  public  judged 
otherwise.  The  act  had  been  followed  by  hard  times ;  at 
best,  it  had  done  nothing  to  remedy  them.  Half-hearted 
in  its  provisions,  unlucky  in  the  time  of  its  enactment,  it 
could  make  no  warm  friends,  and  earn  no  general 
approval. 

Thus,  whether  in  its  effects  on  legislation  or  on  public 
opinion,  the  movement  for  tariff  reform  from  1887  to  1894 
was  in  its  outcome  disappointing.  The  decisive  victories 
in  the  elections  of  1890  and  1892  had  led  the  free-traders 
to  form  high  hopes :  the  real  beginning  of  the  long  de- 
ferred reform  seemed  at  last  at  hand.  But  the  victorious 
party  was  soon  split  by  internal  dissensions.  With  the 
acute  crisis  of  1893  and  the  growing  accentuation  of 
differing  opinions  on  the  currency,  that  issue  forced  itself 
forward.  The  session  of  1893-94,  as  it  progressed,  wit- 
nessed slackened  enthusiasm,  inept  leadership,  and  an 
inglorious  result.  President  Cleveland's  action  in  per- 
mitting the  new  tariff  act  to  become  law  without  his 
signature,  put  the  final  stamp  of  indifference  and  dis- 
appointment  on  the  measure. 


CHAPTER  VII. 

THE  TARIFF  ACT   OF    1897. 

AT  the  time  of  the  passage  of  the  tariff  act  of  1894 
nothing  seemed  more  improbable  than  an  early  return  to 
the  policy  of  high  and  all-embracing  protection.  That 
policy,  as  embodied  in  the  act  of  1890,  had  met  with  ap- 
parently unquestionable  rebukes  at  the  polls  in  1890  and 
1892.  Nor  was  there  anything  in  the  legislation  of  1894 
to  invite  a  reaction.  As  we  have  seen,  the  act  of  that 
year,  so  far  from  being  radical,  had  been,  with  the  single 
exception  of  the  free  admission  of  wool,  anxiously  con- 
servative. Once  it  was  passed,  the  community  heaved  a 
sigh  of  relief  and  dared  to  hope  that  from  this  quarter  at 
least  there  would  be  for  a  space  no  further  cause  of  in- 
dustrial uncertainty  and  disturbance. 

If  this  reasonable  expectation  was  disappointed,  the  ex- 
planation is  to  be  found,  not  in  any  demonstrable  change 
in  public  feeling,  but  in  the  complete  overturn  in  the  gen- 
eral political  situation.  Suddenly  and  unexpectedly,  the 
tariff  was  shoved  aside  as  the  party  issue,  and  the  cur- 
rency took  its  place.  The  stormy  session  of  1893,  in 
which  the  silver-purchase  act  of  1890  had  been  repealed, 
foreshadowed  the  coming  change ;  the  commercial  crisis 
of  1893,  and  the  years  of  depression  which  followed, 


322  HISTORY  OF   THE  EXISTING   TARIFF. 

completed  it  with  surprising  quickness.  Ever  since  the 
demoralizing  days  of  the  excessive  paper  issues  of  the 
civil  war,  periods  of  depression  have  favored  the  growth 
of  the  party  of  cheap  money.  The  free-silver  party,  now 
the  party  of  cheap  money,  found  its  hold  strengthening 
in  the  South  and  West,  and  finally  captured  the  Demo- 
cratic organization.  In  the  South,  always  the  main 
seat  of  the  political  strength  of  the  Democrats,  the  tariff 
question  had  for  some  time  been  holding  its  dominant 
place  largely  as  a  matter  of  tradition.  The  opposition 
to  protection  had  been  inherited  from  the  political  tenets 
of  ante-bellum  days,  and  the  tariff  issue  was  easily  dis- 
placed by  the  new  and  burning  question.  The  majority 
of  the  Democrats  of  the  new  generation  were  won  to  the 
free-silver  side ;  the  old  leaders  were  contemptuously  dis- 
carded ;  the  political  centre  of  gravity  suddenly  shifter1 
The  Democrats  being  pledged  defiantly  to  one  side,  the 
Republicans  had  no  choice  but  to  take  the  other.  Thus 
the  election  of  1896  turned  directly  on  the  question  of 
the  free  coinage  of  silver.  The  popular  verdict  was  clear 
on  that  question,  and  on  that  only. 

It  was  not  to  be  expected,  however,  that  the  Republi- 
can party  would  desert  its  old  faith,  or  turn  suddenly 
with  whole  and  single  heart  to  the  new  issue  forced  upon 
it.  For  years — almost  for  generations — the  Republicans 
had  been  fencing  and  compromising  on  the  various  phases 
which  the  currency  question  from  time  to  time  assumed. 
Moreover,  the  depression  which  set  in  after  the  crisis  of 
1893  made  an  opportunity  for  the  apostles  of  high  pro* 


THE   TARIFF  ACT  OF  1897.  323 

tection  as  well  as  for  those  of  free  silver.  Both  parties 
in  the  newspaper  tariff  controversy  of  1890-94  had  pre- 
dicted a  general  rush  of  prosperity,  the  one  from  high 
duties,  the  other  from  low  duties. y  'As  the  years  succeed- 
ing 1893  grew  blacker  and  blacker,  the  stanch  protection- 
ists had  the  opportunity  to  cry:  "  We  told  you  so;  let  us 
return  to  the  policy  of  prosperity."  In  the  early  part  of 
1896,  before  the  silver  question  had  forced  itself  to  the 
front,  the  Republicans  had  resolved  to  stake  the  issue  once 
more  on  protection ;  and  it  had  accordingly  been  settled 
that  Mr.  McKinley  was  to  be  the  party  candidate  for  the 
Presidency.  What  might  have  been  the  outcome  of  a 
campaign  in  which  the  tariff  was  the  single  issue  cannot 
be  said;  though  the  general  conditions  at  the  moment 
certainly  were  favorable  to  the  party  not  in  power.  Fate 
willed  it  that  the  campaign  centred  on  silver.  But  here, 
after  all,  the  Republicans  were  on  the  defensive.  As  to 
the  currency,  they  undertook  only  to  maintain  the  status 
quo ;  while  on  the  tariff,  though  it  might  be  in  the  back- 
ground during  the  campaign,  they  had  resolved  to  take 
the  offensive,  and  had  engaged  to  legislate  afresh  at  the 
first  opportunity. 

This  difference  in  disposition  as  to  the  two  problems 
became  more  pronounced  when  the  smoke  of  battle 
cleared  away,  and  the  next  move  was  in  order.  While 
the  popular  and  electoral  votes  had  been  clearly  for  the 
Republicans,, the  complexion  of  the  national  legislature 
was  not  so  altered  as  to  give  them  a  free  hand  on  the 
currency.  In  the  Senate  they  had  no  controlling  major- 


324  HISTORY  OF  THE  EXISTING   TARIFF. 

ity  without  the  aid  of  silver  votes.  On  the  currency 
question  the  party,  as  such,  could  do  nothing, — certainly 
nothing  without  dissension  and  recrimination.  But  on 
the  tariff  question  something  could  be  done  at  once. 

The  occasion  for  action  was  the  more  urgent  because 
of  the  state  of  the  finances.  For  several  years  there  had 
been  a  deficit  in  the  current  operations  of  the  Treasury. 
The  first  fiscal  year  in  which  the  balance  had  been  on  the 
wrong  side  was  1893-94;  and  then  followed  several  years 
similarly  unfortunate.1  The  very  circumstance  that  the 
deficit  appeared,  and  indeed  had  been  most  serious,  while 
the  tariff  act  of  1890  was  still  in  force,  indicated  that  it  was 
due,  not  to  the  particular  provisions  of  the  act  of  1890  or 
of  its  successor  of  1894,  but  to  the  general  industrial  con- 
ditions of  the  period  after  1893.  The  great  crisis  of  1893, 
itself  the  result  of  a  complexity  of  causes,  among  which 
reckless  monetary  legislation  was  the  chief,  had  been  fol- 
lowed, as  such  revulsions  must  be,  by  a  sharp  falling-off  in 
the  imports  and  a  consequent  heavy  decline  in  the  customs 
revenue,  fine  deficit  which  resulted  was  often  alleged  to 
be  due  to  specially  inadequate  legislation  in  1894.  The 


•  Fiscal  Year. 

Ordinary 
Revenue. 

Expendi- 
tures. 

1892-93 

461.7 

459-4 

2.3  Surplus 

1893-94 

372.8 

442.6 

69.8  Deficit. 

1894-95 

39°-  4 

433-2 

42.8       •• 

1895-96 

409.5 

434-7 

25.2      " 

1896-97 

430.4 

448.4 

18.0      " 

The  figures  indicate  millions  of  dollars.  The  deficit  really  began  to  ap- 
pear in  the  second  half-year  of  the  fiscal  year  1892-93  ;  but  ttte  receipts  in 
the  first  half-year  had  been  large,  so  that  this  fiscal  year  as  a  whole 
a  small  surplus. 


THE    TARIFF  ACT  OF  1897.  325 

act  of  1894  had  indeed  failed  to  make  rigorously  careful 
provision  for  the  needed  revenue;  but  the  same  had 
been  the  case  with  the  act  of  i8^p,  and  was  again  the 
case,  as  we  shall  presently  see,  with  that  of  1897.  The 
looseness  of  our  federal  legislation,  so  far  as  careful  cal- 
culation of  income  and  outgo  is  concerned,  is  an  old  and 
familiar  phenomenon,  the  result  partly  of  general  politi- 
cal conditions  and  partly  of  the  reliance  on  so  variable  a 
source  of  revenue  as  protective  customs  duties.  But  in 
partisan  discussion,  much  was  made  of  the  failure  of  the 
act  of  1894  to  yield  the  revenue  needed  at  the  time;  and 
at  all  events  some  measure  of  relief  for  the  Treasury  was 
called  for./ 

Hence  President  McKinley,  in  calling  the  extra  session 
of  1897,  asked  Congress  to  deal  solely  with  the  import 
duties  and  the  revenue.  The  two  questions  of  industrial 
policy  and  of  legislation  for  revenue  ought,  indeed,  to  be 
considered  separately.  But  in  the  history  of  tariff  legis- 
lation in  the  United  States,  as  in  that  of  most  other 
countries,  they  have  been  constantly  interwoven ;  and  so 
they  were  in  this  case.  What  with  the  undeniable  need 
of  revenue,  the  comparative  ease  with  which  party 
strength  could  be  consolidated  on  the  question  of  pro- 
tection, the  old  predilection  of  all  the  leading  spirits 
among  the  Republicans  for  that  issue,  and  the  clearly 
expressed  wish  of  the  President,  the  tariff  at  the  extra 
session  received  exclusive  consideration.  Thus  the  first 
fruits  of  the  election  of  1896  were  legislation,  not  on  the 
question  which  had  been  uppermost  in  the  campaign,  but 


326  HISTORY  OF   THE  EXISTING   TARIFF. 

on  the  tariff  question,  on  which  no  clear  and  unequivocal 
evidence  of  popular  feeling  had  been  secured. 

The  legislative  history  of  the  measure  was  instructive, 
and  in  some  respects  showed  striking  contrasts  with  that 
of  its  predecessor  of  1894.  In  the  House  the  bill  was 
reported  by  the  Committee  on  Ways  and  Means  as  early 
as  March  i8th,  within  three  days  after  the  session  began. 
This  extraordinary  promptness  was  made  possible  by 
methods  that  paid  scant  respect  to  the  letter  of  the  law. 
Strictly,  so  long  as  the  new  Congress  had  not  met,  no 
one  was  authorized  to  take  any  steps  towards  legislation 
at  its  hands.  But,  long  before  this,  it  was  settled  that 
Mr.  Reed  was  to  be  once  more  Speaker,  and  he  was  able 
to  intimate  that  the  existing  Committee  on  Ways  and 
Means  was  to  remain  substantially  unchanged  in  the 
next  Congress;  and,  during  the  hold-over  session  of 
1896-97,  that  committee  accordingly  was  at  work  on  the 
tariff  bill,  and  was  able  to  present  it  to  the  new  Congress 
immediately  on  its  assembling.  Mr.  Dingley,  already 
chairman  of  the  committee  in  the  Fifty-fourth  Congress 
(1895-97),  was  again  to  be  chairman  for  the  next;  and 
his  name  was  attached  in  popular  discussion  to  the  new 
measure  which  he  was  able  to  present  with  such  celerity. 

The  action  of  the  House  was  as  prompt  as  that  of  its 
committee.  Within  less  than  two  weeks,  on  March  3 1st, 
the  bill  was  passed.  Only  a  comparatively  small  part  of 
it  had  been  considered  in  the  House:  no  more  than 
twenty-two  of  the  one  hundred  and  sixty-three  pages 
were  taken  up  for  discussion.  In  the  main,  the  com- 


THE    TARIFF  ACT  OF  1897.  327 

mittee  scheme  was  adopted  as  it  stood,  being  accepted 
once  for  all  as  the  party  measure  and  passed  under  the 
pressure  of  rigid  party  discipline.  The  whole  procedure 
was  doubtless  not  in  accord  with  the' theory  of  legislation 
after  debate  and  discussion.  But  it  was  not  without  its 
good  side  also.  It  served  to  concentrate  responsibility, 
to  prevent  haphazard  amendment,  to  check  in  some 
measure  the  log-rolling  and  the  give-and-take  which  beset 
all  legislation  involving  a  great  variety  of  interests. 
Under  the  iron  rule  of  Speaker  Reed,  the  House  gav? 
the  session  to  the  enactment  of  a  deliberately  planned 
tariff  bill,  and  to  that  only. 

In  the  Senate  progress  was  slower,  and  the  course  of 
events  showed  greater  vacillation.  The  bitt,  referred  at 
once  to  the  Senate  Committee  on  Finance,  was  reported 
after  a  month,  on  May  8th,  with  important  amendments. 
There  was  an  attempt  to  impose  some  purely  revenue 
duties;  and,  as  to  the  protective  duties,  the  tendency 
was  towards  lower  rates  than  in  the  House  bill,  though 
on  certain  articles,  such  as  wool  of  low  grade,  hides,  and 
others  (of  which  more  will  be  said  presently),  the  drift 
was  the  other  way.  The  Senate,  however,  paid  much 
less  respect  than  the  House  to  the  recommendations  of 
the  committee  in  charge.  In  the  course  of  two  months, 
from  May  4th  to  July  7th,  it  went  over  the  tariff  bill 
item  by  item,  amending  without  restraint,  often  in  a  per- 
functory manner,  and  not  infrequently  with  the  outcome 
settled  by  the  accident  of  attendance  on  the  particular 
day ;  on  the  whole,  with  a  tendency  to  retain  the  higher 


328  HISTORY  OF   THE  EXISTING   TARIFF. 

rates  of  the  House  bill.  As  passed  finally  by  the  Senate 
on  July  /th,  the  bill,  though  it  contained  some  872 
amendments,  followed  the  plan  of  the  House  COITK 
mittee  rather  than  that  of  the  Senate  Committee.  As 
usual,  it  went  to  a  Conference  Committee.  In  the 
various  compromises  and  adjustments  in  the  Senate  and 
in  the  Conference  Committee  there  was  little  sign  of  the 
deliberate  plan  and  method  which  the  House  had  shown, 
and  the  details  of  the  act  were  settled  in  no  less  haphaz- 
ard fashion  than  has  been  the  case  with  other  tariff  meas- 
ures. As  patched  up  by  the  Conference  Committee,  the 
bill  was  promptly  passed  by  both  branches  of  Congress, 
and  became  law  on  July  24th. 

In  what  manner  these  political  conditions  affected  the 
character  of  the  act  will  appear  from  a  consideration  of 
the  more  important  specific  changes. 

First  and  foremost  was  the  re-imposition  of  the  duties 
on  wool.  As  the  repeal  of  these  duties  had  been  the  one 
important  change  made  by  the  act  of  1894,  so  their  res- 
toration was  the  salient  feature  in  the  act  of  1897.  On 
clothing  and  combing  wool  the  precise  rates  which  had 
been  imposed  in  the  tariff  act  of  1890  were  restored. 
Clothing  wool  was  subjected  once  more  to  a  duty  of 
eleven  cents  a  pound,  combing  wool  to  one  of  twelve 
cents.  On  carpet  wool  there  were  new  graded  duties, 
heavier  than  any  ever  before  levied.  If  its  value  was 
twelve  cents  a  pound  or  less,  the  duty  was  four  cents; 
if  over  twelve  cents,  the  duty  was  seven  cents. 

In  1894,  when  the  duties  on  wool  were  removed,  the 


THE    TARIFF  ACT  OF  1897.  329 

general  expectation  alike  of  the  advocates  and  opponents 
of  protection  was  that  this  change  had  come  to  stay. 
The  political  and  economic  probabilities  in  1894  were 
such  as  to  justify  the  expectation.  The  astonishing 
growth  of  all  manufactures,  uninterrupted  before  and 
after  that  date,  made  it  certain  that  the  United  States 
under  any  tariff  conditions  would  be  a  great  manufactur- 
ing country,  and  seemed  to  warrant  the  belief  that  the 
desire  for  freedom  in  the  use  of  materials  would  become 
stronger,  the  prospect  of  an  expanding  foreign  trade 
more  tempting,  the  demand  for  protection  to  domestic 
industries  less  insistent.  The  need  of  foreign  wool  for 
clothing  the  people  of  the  United  States  and  the  inade- 
quacy of  the  domestic  supply  were  clear  then,  and  in- 
deed became  more  clear  in  the  intervening  years.  In  the 
woollen  manufacturing  industry  itself  it  was  to  be  ex- 
pected with  confidence  that,  once  the  transition  to  free 
wool  accomplished,  the  manufacturers  would  oppose  a 
return  to  the  old  regime.  And,  as  it  proved,  the  manu- 
facturers expressed  themselves  in  terms  surprisingly 
strong  on  the  disadvantages,  from  their  point  of  view, 
of  a  return  to  the  wool  duties.1  If,  nevertheless,  the 
change  was  made,  the  explanation  is  to  be  found  mainly 
in  the  unexpected  turn  of  the  political  wheel. 

1  ' '  Never  until  he  had  experience  under  free  wool  did  the  manufacturer 
realize  the  full  extent  of  the  disadvantages  he  suffers  by  reason  of  the  wool 
duty,  and  the  impossibility,  by  any  compensating  duty,  of  fully  offsetting 
these  disadvantages."  So  much  was  said  in  the  statement  made  before  the 
Ways  and  Means  Committee  by  the  secretary  of  the  Wool- Manufacturers' 
Association.  Bulletin  of  the  Wool  Manufacturers,  March,  1897,  p.  84. 


33O  HISTORY  OF  THE  EXISTING   TARIFf. 

Wool  is  the  article  as  to  which  it  can  be  said  with 
greatest  truth  and  greatest  plausibility  that  the  farmer 
gets  his  share  of  the  largesses  of  protection.  It  is  true 
that  in  1892  the  farmers  of  Ohio  and  of  other  central 
States  seemed  to  show  that  they  were  indifferent  to  the 
attraction ;  for  in  that  year  a  whole  row  of  central  States 
had  voted  against  the  party  of  protection,  and  in  Ohio 
itself  the  victory  of  that  party  had  been  so  narrow  as  to 
be  equivalent  to  a  defeat.  It  is  true  also  that  the  main 
effects  of  the  duty  on  wool  would  certainly  be  to  stimu- 
late the  activity  and  increase  the  profits  of  the  large 
wool-growers  in  the  thinly  settled  trans-Missouri  region, 
rather  than  to  benefit  substantially  the  farmers  proper.1 
But  the  determination  to  give  evidence  of  fostering 
care  for  the  farming  interest  was  too  strong  to  be  affected 

1  In  a  formal  communication  to  the  Ways  and  Means  Committee  the 
Wool- Manufacturers'  Association  used  the  following  language  :  "  The  real 
explanation  of  these  extraordinary  demands  lies  in  the  fact  that  the  wool- 
growers  of  the  Middle  West  find  themselves  in  need  of  protection  against 
their  American  competitors  west  of  the  Mississippi  River.  It  was  not  the 
imports  under  the  McKinley  law,  but  the  cheaper-grown  wools  of  the  Far 
West,  which  made  wool-growing  relatively  unprofitable  on  the  high-priced 
lands  of  Ohio,  Michigan,  Pennsylvania.  Every  further  expansion  of  the 
ranch  industry  must  increase  the  effects  of  this  competition.  An  enormous 
tariff  on  wool,  such  as  is  proposed,  would  overstimulate  this  ranch  industry, 
by  its  promise  of  excessive  profits,  and  would  thus  still  farther  increase  the 
difficulties  of  the  Middle- West  farmer."  Bulletin  of  the  Wool-Manufac- 
turers, June,  1897,  p.  133.  The  wool-growers  had  at  first  asked  a  duty  of 
fifteen  cents  a  pound  on  clothing  and  combing  wool,  and  finally  had  pro- 
posed, as  an  "ultimatum,"  twelve  cents.  The  manufacturers  had  offered 
to  join  in  recommending  duties  of  eight  and  ten  cents  (graded  by  value)  on 
clothing  wool,  and  of  nine  and  eleven  cents  on  combing  wool.  In  the  act 
the  growers  got  substantially  their  ultimatum, — eleven  cents  on  clothing 
wool,  twelve  cents  on  combing  wool. 


THE    TARIFF  ACT  OF  1897.  331 

by  such  considerations.  The  silver  party  had  posed 
ostentatiously  as  the  special  friend  of  the  debtor  and  the 
farmer.  The  Republicans,  having  pushed  forward  the 
tariff  as  their  first  strong  card,  must  needs  do  something 
for  the  farmer;  and  heavy  duties  on  wool  were  the 
natural  result,  consistent  at  once  with  the  established 
party  policy  and  with  the  long-continued  and  earnest 
contention  of  President  McKinley  himself. 

One  other  part  of  the  wool  duties  served  to  show  how 
the  general  political  complications  affected  the  terms  of 
the  tariff  act.  The  duties  on  carpet  wool,  as  has  already 
been  noted,  were  made  higher  than  ever  before.  In  the 
House  the  rates  of  the  act  of  1890  had  been  retained; 
but  in  the  Senate  new  and  higher  rates  were  inserted, 
and,  though  somewhat  pruned  down  in  the  Conference 
Committee,  were  retained  in  the  act.  They  were  de- 
manded by  the  Senators  from  some  States  in  the  far  West, 
especially  from  Idaho  and  Montana.  These  Senators, 
though  Republican,  were  on  the  silver  side  in  the  mone- 
tary controversy,  and  so  by  no  means  in  complete  accord 
with  their  associates.  They  needed  to  be  placated ;  and 
they  succeeded  in  getting  higher  duties  on  the  cheap 
carpet  wools,  on  the  plea  of  encouragement'  for  the  com- 
paratively coarse  clothing  wool  of  their  ranches.  It  had 
been  shown  time  and  again,  on  the  very  principles  of 
protection,  that  carpet  wools  were  not  grown  in  the 
country,  and  that  those  imported  did  not  affect  to  any 
appreciable  extent  the  market  for  domestic  wool.  But 
the  Western  Senators,  who  held  the  balance  of  power, 


332  HISTORY  OF   THE  EXISTING    TARIFF. 

were  able  none  the  less  to  secure  this  concession  to  their 
demands.  It  deserves  to  be  noted,  on  the  other  hand,  that 
the  Senate  had  been  disposed  to  lower  the  duties  on  cloth- 
ing and  combing  wool.  The  Finance  Committee  had  pro- 
posed rates  of  eight  and  nine  cents  a  pound,  and  the  Senate 
itself  had  voted  rates  of  ten  and  eleven  cents ;  the  reduction 
being  due  to  the  influence  of  the  manufacturers,  who  were 
opposed  to  the  high  duties  not  only  because  of  the  price  ad- 
ded on  the  raw  material,  but  also  because  of  the  still  higher 
duties  on  their  own  products  which  would  be  entailed.1 
But  in  the  Conference  Committee  the  House  rates  of 
eleven  cents  on  clothing  wool  and  twelve  cents  on  combing 
wool  were  restored,  and  so  appeared  on  the  statute  book. 
The  same  complications  that  led  to  the  high  duty  on 
carpet  wool  brought  about  a  duty  on  hides.  This  rawest 
of  raw  materials  had  been  on  the  free  list  for  just  a 
quarter  of  a  century,  since  1872,  when  the  duty  of  the 
war  days  had  been  repealed.  It  would  have  remained 
free  of  tax  if  the  Republicans  had  been  able  to  carry  out 
the  policy  favored  by  the  great  majority  of  their  own 
number.  But  here,  again,  the  Senators  from  the  ranch- 

1  "  It  is  not  pleasant  for  the  American  wool  manufacturer  to  be  told  that 
the  average  ad-valorem  rate  upon  woollen  goods,  under  the  tariff  of  1890, 
was  98  per  cent.  It  does  not  particularly  help  the  case  from  the  consumer's 
point  of  view  to  reply  that  the  actual  protective  duty  accorded  him  under 
that  law  did  not  exceed  45  per  cent.  The  public  looks  at  the  fact — 98  per 
cent."  So  spoke  the  Secretary  of  the  Wool-Manufacturers'  Association  to 
the  House  Committee.  Bulletin  of  the  Wool  Manufacturers,  March, 
1897,  p.  83.  None  the  less,  the  manufacturers  in  1897  secured,  and  pre- 
sumably asked  for,  an  increase  of  the  protective  (i.  e. ,  ad-valorem]  duty  on 
woollens  to  55  per  cent., — a  rate  higher  than  any  imposed  before. 


THE   TARIFF  ACT  OF  1897.  333 

ing  States  were  able  to  dictate  terms.  In  the  House 
bill,  hides  had  still  remained  on  the  free  list.  In  the 
Senate  a  duty  of  20  per  cent.  was7tacked  on.  The  rate 
was  reduced  to  15  per  cent,  in  the  Conference  Committee, 
and  so  remained  in  the  act. 

The  restored  duties  on  wool  necessarily  brought  in 
their  train  the  old  system  of  high  compensating  duties 
on  woollens.  Once  more  we  find  the  bewildering  com- 
bination of  ad-valorem  duties  for  protection  and  specific 
duties  to  compensate  for  the  charges  on  the  raw  material. 
In  the  main,  the  result  was  a  restoration  of  the  rates  of 
the  act  of  iScp.1  There  was  some  upward  movement 
almost  all  along  the  line ;  and  the  ad-valorem  duty  alone, 
on  the  classes  of  fabrics  which  are  most  largely  imported, 
crept  up  to  55  per  cent.  Just  thirty  years  before,  in 
1867,  when  the  system  of  compound  duties  on  woollens 
was  first  carefully  worked  out,  it  rested  on  the  assumption 
that  a  "  net  "  protection  of  25  per  cent,  was  to  be 
secured.  But  the  ad-valorem  rate,  designed  to  give  this 
net  protection,  had  advanced  steadily  in  the  acts  of  1883 
and  1890,  and  in  the  act  of  1897  reached  55  per  cent. ! 

1  The  drift  of  the  changes  from  the  rates  of  1890  is  shown  by  the  follow- 
ing figures  as  to  the  two  classes  of  goods  most  largely  imported  : 


DUTIES   ON  WOOLLEN  CLOTHS. 


l8gO. 


(1)  If  worth  30  cents  or  less  per 
pound,  33  cents  per  pound  plus 

40  per  cent. 
.  .  ~T 

(2)  If  worth  between  30  and  40  cents 

per  pound,  38^  cents  per  pound 
plus  40  per  cent. 


1897. 


(i)  If  worth  40  cents  or  less  per 
pound,  33  cents  per  pound  plus 
50  per  cent. 


334  HISTORY  OF   THE  EXISTING    TARIFF. 

The  experiment  of  free  wool  and  of  moderated  (though 
but  slightly  moderated)  duties  on  woollens,  was  thus 
tried  under  the  act  of  1894  for  three  short  years,  and 
these,  moreover,  years  of  great  general  depression.  As 
has  been  already  said,  even  under  normal  business  con- 
ditions the  transition  from  the  system  of  high  duties  must 
have  been  for  a  while  disturbing  and  trying,  and  the  full 
effects  of  the  change,  alike  for  consumers  and  producers, 
could  not  have  worked  themselves  out  for  several  years.1 

f  (2)  If  worth  between  40  and  70  cents 

(3)  If  worth  more  than  40  cents  per  Per  Pound'  44  cents  per  pound 

pound,  44  cents  per  pound  plus  \         Plus  5°  Per  cent< 
50  per  cent.  (3)  H  worth  over  70  cents  per  pound, 

44  cents  per  pound  plus  55  per 
I         cent. 


DUTIES  ON  DRESS  GOODS. 


1890. 


(i)  Cotton  warp,  worth  15  cents  a 
yard  or  less,  7  cents  a  yard  plus 
40  per  cent. 


1897. 


(i)  and  (2)  the  same  ;  but  with  the 
proviso  that  the  ad-valorem  duty 


(2)  Cotton  warp  worth  more  than  15  shall  be  55  per  cent,  if  the  value 

cents  a  yard,  8  cents  a  yard  plus  is  over  70  cents  per  pound. 

50  per  cent. 

V  (3)  If  the  warp  has  any  wool,  1 1  cents 
per  yard  plus  50  per  cent.  ;  but 


(3)  If  the  warp  has  any  wool,  12  cents 
a  yard  plus  50  per  cent. 


with  the  proviso  that  the  ad-va- 
lorem duty  shall  be  55  per  cent. 


if  the  value  exceeds  70  cents  per 
pound. 

It  will  be  observed  that,  under  the  act  of  1897,  on  dress  goods  (of  which 
some  $20,000,000  worth  was  imported  in  1896),  the  customs  officers  must 
ascertain,  first,  whether  the  warp  consists  "  wholly  of  cotton  or  other  vege- 
table material "  ;  if  so,  whether  the  goods  are  worth  more  or  less  than  7 
cents  a  yard  ;  if  not,  whether  they  are  worth  more  or  less  than  70  cents  a 
pound.  All  these  circumstances  affect  the  rate  of  duty,  and  obviously  in- 
crease the  difficulties  of  administration  and  the  opportunities  for  evasion, 

1  See  above,  pp.  294-296. 


THE   TARIFF  ACT  OF  1897.  335 

While  the  manufacturers  had  cheaper  wool  and  unlimited 
choice  in  the  use  of  it,  they  had  to  learn  to  avail  them- 
selves  of  this  advantage.  The  wool-growers,  especially 
in  the  central  districts,  had  to  face' a  fall  in  the  price  of 
wool,  and  had  hardly  time  to  make  the  change  (more  or 
less  inevitable  under  any  conditions)  of  raising  sheep  for 
mutton  rather  than  for  wool.  As  it  happened,  all  this 
distressing  transition  was  made  the  more  trying  because 
it  took  place  in  a  period  when  all  industry  was  de- 
pressed. Just  as  the  general  revulsion  of  the  years  1893- 
97  was  ascribed  by  the  protectionists  to  the  tariff  act  of 
1894,  so  the  special  difficulties  of  the  wool  manufacturers 
and  wool-growers  were  ascribed  to  that  measure,  and  here 
with  some  show  of  reason.  Given  a  reasonable  time,  with 
general  economical  conditions  of  a  normal  sort,  and  it  is 
more  than  probable  that  the  new  regime  in  the  wool  in- 
dustry would  have  won  its  way  to  general  acceptance 
But  the  experiment  of  free  wool  and  of  simple  duties  on 
woollens  was  tried  for  too  short  a  time  to  prove  the 
wisdom  of  the  change.1 

On  cotton  goods  the  general  tendency  was  to  impose 
duties  lower  than  those  of  1890.  This  was  indicated  by 
the  drag-net  rate,  on  manufactures  of  cottri  not  other 
wise  provided  for,  which  had  been  fifty  pei  jent.  in  1890, 
and  was  45  per  cent,  in  1897.  There  was,  again,  as  in 

1  On  the  episode  of  1894-97,  and  indeed  on  the  whole  history  of  wool- 
growing  from  the  earliest  times  to  1908,  by  far  the  best  investigation  is 
that  of  Professor  C.  W.  Wright,  Wool-growing  and  the  Tariff,  published 
in  the  Harvard  Economic  Studies  (1910). 


336  HISTORY  OF  THE  EXISTING   TARIFF. 

1890,  a  rigorously  elaborate  system  of  combined  specific 
and  ad-valorem  duties  on  certain  sorts  of  goods  selected 
for  especially  heavy  rates,  such  as-  cotton  stockings  and 
hose,  and  plushes,  velvets,  corduroys.1  In  the  main,  the 
cotton  manufacturers  held  aloof  from  the  new  measure. 
The  rates  of  the  act  of  1894  had  been  not  unsatisfactory 
to  them ;  and  they  may  have  feared  some  such  policy  in 
regard  to  their  material  as  befell  the  wool  manufacturers. 
In  fact,  the  Senate,  in  the  course  of  its  tortuous  amend- 
ments, inserted  in  the  bill  (apparently  somewhat  to  its 
own  surprise)  a  duty  on  raw  cotton,  designed  to  check 
the  importation  of  certain  kinds  of  Egyptian  cotton 
whose  fibre  fits  it  for  some  special  uses.  But  here  no  po- 
litical complication  within  the  Republican  party  bolstered 
up  the  change ;  and  this  proviso,  absurd  enough,  but  no 
more  absurd  than  those  relating  to  carpet  wool  and  to 
hides,  disappeared  in  the  Conference  Committee. 

On  two  large  classes  of  textile  goods  new  and  distinctly 
higher  duties  were  imposed, — on  silks  and  linens.  The 
duties  on  silks  present  a  remarkable  case  of  the  unexpected 
extension  of  the  protective  system.  From  the  time  of  the 

1  Compare  pp.  267-269  above,  where  the  duties  on  these  articles  under 
the  act  of  1890  are  referred  to.  The  same  objectionable  method  of  specific 
duties,  graded  by  value,  was  applied  in  the  act  of  1897,  and  in  general  with 
higher  rates  ;  thus  by  paragraphs  315,  318,  319,  386  of  the  act  of  1-897.  On 
cotton  hose,  to  give  a  single  example,  the  lowest  classes  (i.  e.,  the  cheapest 
goods)  arid  the  rates  on  them  were  : 

Class.  Duty. 

In  1890— Value  6oc.  or  less  per  dozen  2oc.  a  dozen  plus  2Ojf 

In  1897 — Value  $i  or  less  per  dozen  SOG.  a  dozen  plus  1556 

Clearly,  the  duty  of  1897  was  very  much  higher  than  that  of  1890  had  been. 


THE    TARIFF  ACT  OF  1897.  337 

civil  war,  silks  had  been  subject  to  heavy  ad-valorem 
duties — 60  per  cent,  from  1864  to  1883,  and  50  per  cent, 
from  1883  to  1897.  These  duties  had  caused  a  great 
silk-manufacturing  industry  to  grow  up,  with  results 
that  were  in  some  respects  surprising,  and  might  perhaps 
be  cited  as  showing  the  possibility  of  successful  applica- 
tion of  protection  to  young  industries.  But  the  measure 
of  apparent  success  thus  attained,  and  the  degree  of  pro- 
tection  thus  afforded,  did  not  satisfy  the  manufacturers 
or  the  dominant  protectionists.  An  increasing  compe- 
tition from  silk  goods  produced  in  Japan  was  feared, 
the  spectre  of  *'  cheap  labor  "  being  invoked  once  more. 
Moreover,  the  fraud  and  undervaluation  inevitable  under 
any  high  ad-valorem  duty  had  long  suggested  the  de- 
sirability of  arranging  some  schedule  of  specific  duties  on 
silks.  Unquestionably  the  administration  of  the  ad- 
valorem  duty  had  been  unsatisfactory,  and  the  rates  of 
50  and  60  per  cent,  had  been  less  effective  in  checking 
imports  than  they  would  have  been  without  the  almost 
systematic  undervaluations  by  consignees  and  agents. 
On  the  other  hand,  the  difficulties  of  framing  a  schedule 
of  specific  duties  were  great,  and  indeed  had  hitherto 
been  thought  insuperable.  In  view  of  the  greatly  vary- 
ing qualities  of  the  goods,  and  the  difficulty  of  grading 
them  by  any  external  marks,  duties  by  the  pound  or  yard 
would  be  too  high  on  the  cheaper  goods,  disproportion- 
ately low  on  the  dearer.  The  act  of  1897  boldly  at- 
tempted to  grapple  with  the  difficulties  of  the  case,  and 
for  the  first  time  imposed  specific  duties  on  silks.  The 


338  HISTORY  OF   THE  EXISTING   TARIFF. 

mode  of  gradation  was  to  levy  the  duties  according  to 
the  amount  of  pure  silk  contained  in  the  goods.  The 
duties  were  fixed  by  the  pound,  being  lowest  on  goods 
containing  a  small  proportion  of  pure  silk,  and  rising  as 
that  proportion  became  larger;  with  the  proviso  that  in 
no  case  should  the  duty  be  less  than  50  per  cent.  This 
plan  brought  about  an  unquestionable  increase  in  the 
rates,  especially  on  the  cheaper  silks.  How  great  the  in- 
crease was,  could  be  judged  only  by  a  person  minutely 
conversant  with  the  trade,  and  might  be  difficult  to  cal- 
culate in  advance  even  by  such  a  person.  On  the  other 
hand,  it  was  doubtful  v/hether  the  administrative  difficul- 
ties encountered  under  the  high  ad-valorem  duties  of 
previous  acts  would  not  appear  in  full  force  under  this 
one.  The  exact  determination  of  the  percentage  in 
weight  of  pure  silk  in  any  given  piece  of  so-called  silk 
goods  could  hardly  be  an  easy  matter.  Yet  this  had  to 
be  precisely  ascertained  for  the  satisfactory  administra- 
tion of  the  duties  of  1897.  Thus,  the  duty  on  certain 
kinds  of  silks  was  $1.30  per  pound,  if  they  contained  45 
per  cent,  in  weight  of  silk;  but  advanced  suddenly  to 
$2.25,  if  they  contained  more  than  45  per  cent.  The 
same  sort  of  gradation,  bringing  sudden  great  changes 
in  duty  as  an  obscure  dividing  line  was  crossed,  ran 
through  the  whole  schedule ;  and  the  temptation  to  false 
statement  at  the  hands  of  the  importer  would  seem  to  be 
as  great  as  the  difficulty  of  detection  at  the  hands  of  the 
customs  examiner.  Both  in  the  high  range  of  rates  and 
in  the  attempt  at  rigorous  enforcement  the  new  act  here 


THE   TARIFF  ACT  OF  1897.  339 

went  far  beyond  the  act  of  1890,  making  a  new  and  im- 
portant advance  in  the  application  of  extreme  protection.1 

On  linens  another  step  of  the  same  kind  was  taken, 

"f  •  f 
specific  duties  being  substituted  here  also  for  ad-valorem. 

In  1890,  the  ad-valor  em  rate  on  linens  had  been  raised  to 
50  per  cent.,  to  be  reduced  in  1894  to  35  per  cent.  In 
1897,  a  compound  system  was  adopted:  specific  duties 
imposed  with  ad-valorem  supplements,  such  as  had 
already  been  tried  on  cotton  hose,  velvets,  and  other 
fabrics.  Linens  were  graded  somewhat  as  cottons  had 
been  graded  since  1861,  according  to  the  fineness  of  the 
goods  as  indicated  by  the  number  of  threads  to  the 
square  inch.  If  the  number  of  threads  was  sixty  or  less 
per  square  inch,  the  duty  was  one  and  three  fourths 

1  The  important  part  of  the  silk  schedule  in  the  act  of  1897  is  paragraph 
387,  which  fixed  the  duties  on  "  woven  silk  fabrics  in  the  piece,  not  specially 
provided  for."  The  same  rates  are  applicable,  under  section  388,  to  silk 
handkerchiefs.  The  method  of  grading  is  exemplified  by  the  following 
summary  statement  of  some  of  the  rates  first  enumerated. 

Duties  on  silk  piece  goods  : 

(1)  containing  20$  or  less  in  weight  of  silk,  if  in  the  gum $0.50  per  Ib. 

if  dyed  in  the  piece    .60      ** 

(2)  containing  20  to  30$  in  weight  of  silk,  if  in  the  gum 65       '* 

if  dyed  in  the  piece     .80       " 

(3)  containing  30  to  45$  in  weight  of  silk,  if  in  the  gum 90      " 

if  dyed  in  the  piece  i.io      ** 

(4)  containing  30$   or  less  in  weight  of  silk,  if  dyed  in  the 

thread  or  yarn,  black 75      ** 

other  color 90      ** 

(5)  containing  30  to  45$  in  weight  of  silk,  if  dyed  in  the  thread 

or  yarn,  black 1. 10       *' 

other  color 1.30      '* 

So  the  schedule  goes  on,  the  duties  advancing  by  stages  as  the  per  cent,  in 
weight  of  silk  becomes  greater,  as  the  goods  are  dyed  in  the  thread  or  yarn 


340  HISTORY  OF  THE  EXISTING   TARIFF. 

cents  a  square  yard ;  if  the  threads  were  between  sixty 
and  one  hundred  and  twenty,  the  duty  was  two  and 
three  fourths  cents;  and  so  on, — plus  30  per  cent,  ad- 
valorem  duty  in  all  cases.  But  finer  linen  goods,  unless 
otherwise  specially  provided  for,  were  treated  leniently. 
If  the  weight  was  small  (less  than  four  and  one  half 
ounces  per  yard),  the  duty  was  but  35  per  cent.  On  the 
other  hand,  linen  laces,  or  articles  trimmed  with  lace  or 
embroidery,  were  dutiable  at  60  per  cent., — an  advance 
at  10  per  cent,  over  the  rate  of  1890.  The  new  specific 
duties  on  linens  were  expected  to  induce  some  cotton 
mills  to  turn  to  cheaper  grades  of  linens,  such  as  towel 
cloth ;  but  the  general  conditions  of  the  manufacture  of 
finer  linens  made  it  doubtful  here,  as  in  the  case  of  finer 
silks  and  woollens,  whether  the  imported  fabrics  would 
be  supplanted. 

as  the  goods  are  "  weighted  in  dyeing  so  as  to  exceed  the  original  weight  of 
the  raw  silk,"  and  so  on.  Goods  of  lighter  weight  (less  than  \\  ounces  per 
yard)  are  subject  to  still  higher  duties ;  those  of  lightest  weight  (£  ounce 
per  yard  or  less),  to  the  highest  duty  of  all,  the  maximum  being  $4.50  per 
pound. 

It  deserves  to  be  noticed  that  the  woollen  manufacturers,  confronted  with 
the  undervaluation  problem  under  the  ad-valorem  duties  on  woollens,  found 
it  impossible  to  frame  a  scheme  of  specific  duties.  A  special  committee 
from  their  number,  which  attempted  to  devise  such  a  scheme,  found  that 
"  a  wholly  specific  schedule  is  impossible,  because  of  the  thousands  of  varia- 
tions— in  weave,  in  texture,  in  materials,  in  finish — which  distinguish  wool- 
len goods  from  those  of  all  other  textile  manufactures."  See  Bulletin  of 
the  Wool  Manufacturers,  March,  1897,  p.  72.  In  the  tariff  bill  as  passed 
by  the  House  the  duties  on  woollens  (over  and  above  the  compensating  duty) 
had  been  made  partly  ad  valorem  and  partly  specific  with  gradations  by 
value.  But  this  additional  complication  in  the  woollens  schedule  was  struck 
out  in  the  Senate. 


THE    TARIFF  ACT  OF  1897.  341 

It  was  inevitable,  under  the  political  conditions  of  the 
session,  that  in  this  schedule  something  should  again  be 
attempted  for  the  farmer;  and,  accordingly,  we  find  a 
substantial  duty  on  flax.  The  rate  of  the  act  of  1890 
was  restored, — three  cents  a  pound  on  prepared  flax,  in 
place  of  the  rate  of  one  and  one  half  cents  imposed  by 
the  act  of  1894.  Here,  too,  no  appreciable  economic 
change  was  likely  to  result.  Bagging  for  cotton,  which 
had  been  admitted  free  under  the  act  of  1894,  was  sub- 
jected to  a  duty,  but  a  lower  duty  than  that  of  1890:  the 
rate  being  -fa  cent  per  square  yard  in  1897,  as  compared 
with  i-fy  cents  in  1890.  This  compromise  may  also  be 
regarded  as  making  some  concession  to  the  planter  of 
the  South. 

On  chinaware  the  rates  of  1890  were  restored.  The 
duty  on  the  finer  qualities  which  are  chiefly  imported 
had  been  lowered  to  35  per  cent,  in  1894,  and  was  now 
once  more  put  at  60  per  cent.  On  glassware,  also,  the 
general  ad-valorem  rate,  which  had  been  reduced  to  35 
per  cent,  in  1894,  was  again  fixed  at  45  per  cent.,  as  in 
1890.  Similarly  the  specific  duties  on  the  cheaper  grades 
of  window-glass  and  plate-glass,  which  had  been  lowered 
in  1894,  were  raised  to  the  figures  of  1890;  though  on 
some  of  the  more  expensive  kinds  of  plate-glass  the  lower 
rates  of  1894,  being  still  sufficient  to  prevent  importation, 
were  left  substantially  unchanged. 

The  metal  schedules  in  the  act  of  1897  showed  in  the 
main  a  striking  contrast  with  the  textile  schedules.  Im- 
portant  advances  of  duty  were  made  on  many  textiles, 


342  HISTORY  OF   THE  EXISTING    TARIFF. 

and  in  some  cases  rates  went  considerably  higher  even 
than  those  of  1890.  But  on  most  metals,  and  especially 
on  iron  and  steel,  duties  were  left  very  much  as  they  had 
been  in  1894.  Indeed,  Mr.  Dingley,  in  introducing  the 
bill  in  the  House,  said  that,  "  the  iron  and  steel  schedule, 
except  as  to  some  advanced  products,  had  not  been 
changed  from  the  present  law,  because  this  schedule 
seemed  to  be  one  of  the  two  of  the  present  law  [the 
other  being  the  cottons  schedule]  which  are  differentiated 
from  most  of  the  others,  and  made  in  the  main  pro- 
tective." Hence  we  find,  as  in  the  act  of  1894,  iron 
ore  subject  to  duty  at  forty  cents  a  ton,  and  pig  iron 
at  four  dollars  a  ton.  On  steel  rails  also  there  was  no 
change  from  the  comparatively  moderate  rate  of  1894;  it 
remained  $7.84  per  ton.  On  coal  there  was  a  compromise 
rate.  The  duty  had  been  seventy-five  cents  a  ton  in 
1890,  and  forty  cents  in  1894;  it  was  now  fixed  at  sixty- 
seven  cents. 

On  the  other  hand,  as  to  certain  manufactures  of  iron 
and  steel  farther  advanced  beyond  the  crude  stage,  there 
was  a  return  to  rates  very  similar  to  those  of  1890. 
Thus,  on  pocket  cutlery,  razors,  guns,  we  find  once  more 
the  system  of  combined  ad-valorem  and  specific  duties, 
graded  according  to  the  value  of  the  article.  It  is  not 
easy  to  unravel  the  meaning  and  probable  effects  of  the 
complicated  duties  imposed  in  these  cases ;  but  it  is  clear 
that  they  were  framed  with  a  view  to  imposing  a  very 
high  barrier  to  imports,  and  yet  were  arranged  on  the 
system,  vicious  from  the  administrative  point  of  view,  of 


THE   TARIFF  ACT  OF  1897.  343 

bringing  sudden  changes  in  duty  as  a  given  point  in  ap- 
praised value  is  passed.1 

Some  other  items  in  the  metal  schedule  deserve  notice. 
Copper  remained  on  the  free  list,  where  it  had  been  put 
in  1894.  Already  in  1890  the  duty  had  been  reduced  to 
one  and  one  fourths  cents  per  pound.  As  the  copper 
mines,  almost  alone  among  the  great  enterprises  of  the 
country,  had  been  enjoying  uninterrupted  prosperity, 
even  during  the  period  of  depression,  and  had  been  ex- 
porting their  product  on  a  great  scale,  no  one  cared  a 
straw  for  the  duty.  For  good  or  ill  the  copper  duty  had 
worked  out  all  its  effects  years  before.  On  the  other 
hand,  the  duties  on  lead  and  on  lead  ore  went  up  to  the 
point  at  which  they  stood  in  1890.  Here  we  have  once 
more  the  signs  of  concession  to  the  silver  Republicans 

1  Pocket  cutlery  supplies  a  good  example  of  the  methods  applied  in  the 
acts  of  1890  and  1897  to  the  articles  here  mentioned.  The  rates  of  duty 
were: 

1890. 
Class.  Duty. 

(1)  Value  (per  dozen)  50  cents  or  less.        12  cents  (per  dozen)  plus  50  per 

cent. 

(2)  Value  50  cents  @  $1.50.  50  cents  plus  50  per  cent. 

(3)  Value  $1.50  @  $3.00.  $1.00  plus  50  per  cent. 

(4)  Value  over  $3.00.  $2.00  plus  50  per  cent. 

1897. 

Class.  Duty. 

(a)  Value  (per  dozen)  40  cents  or  less.  40  per  cent. 

(1)  Value  40  @  50  cents.  12  cents  plus  40  per  cent. 

(2)  Value  50  cents  @  $1.25.  60  cents  plus  40  per  cent. 

(3)  Value  $1.25  @  $3.00  per  dozen.  $1.20  plus  40  per  cent. 

(4)  Value  over  $3.00.  $2.40  plus  40  per  cent. 

It  will  be  seen  that  on  the  cheapest  knives  there  was  a  reduction  in  duty  as 
compared  with  1890  ;  while  on  the  higher  classes,  and  especially  on  the  sec- 


344  HISTORY  OF   THE  EXISTING   TARIFF. 

of  the  far  West.  A  considerable  importation  from 
Mexico  of  ores  bearing  both  lead  and  silver  had  brought 
some  competition  with  American  mines  yielding  the 
same  metals  —  competition  which  could  not  well  be 
helped  as  to  the  silver,  since  that  would  find  its  way  to 
the  international  market  in  any  case,  but  which  could  be 
impeded  so  far  as  the  domestic  market  for  lead  was  con- 
cerned. Accordingly  there  was  a  substantial  duty  on 
lead,  and  on  lead-bearing  ore  in  proportion  to  the  lead 
contained.1 

In  general,  the  duties  in  the  metal  schedule  ceased 
to  excite  controversy,  and  even  to  arouse  attention. 
Whether  or  no  as  a  result  of  the  application  of  the  pro- 
tective system,  the  iron  and  steel  industry  had  in  fact 

ond,  there  was  an  increase.  The  most  effective  change  was  that  by  which 
the  line  of  classification  by  value  was  shifted  from  $1.50  to  $1.25, — a  shift 
which  caused  many  goods  to  come  under  class  3  in  1897  which  were  in  class 
2  in  1890,  and  so  caused  a  great  advance  in  the  duty  chargeable.  It  may 
be  noted  incidentally  that  the  figure  of  $1.50,  to  mark  the  dividing  line  be- 
tween classes  i  and  2,  had  been  retained  both  in  the  House  bill  and  in  the 
Senate  bill  :  the  change  to  $1.25  was  made  at  the  last  moment  in  the  Con- 
ference Committee.  It  needs  only  a  glance  at  the  duties  under  these  classes 
in  1897  to  show  how  great  will  be  the  temptation  to  manufacture  knives,  and 
to  juggle  with  their  value,  in  such  manner  as  to  bring  them  below  the  divid- 
ing line  of  $1.25.  The  same  vicious  method  of  grading  the  duties  on  pocket- 
knives  had  been  followed  in  the  act  of  1894,  though  with  somewhat  lower 
rates.  In  1890  and  1897  (not  in  1894)  the  method  was  also  applied  to 
razors,  table-knives,  and  guns,  and  in  1897  to  shears  and  scissors.  The 
pertinent  paragraphs  of  the  act  of  1897  are  numbers  153  to  158. 
'The  duties  from  1890  to  1897  were  : 

Loene°adecoPneZ>"dnd  ^ad  per  pound. 

1890 i£  cents.  2    cents. 

1894 |  cent.  i    cent. 

1897 . . . . , 1 1  cents.  2|  cents. 


THE   TARIFF  ACT  OF  1897.  345 

passed  the  period  of  tutelage,  and  had  become  not  only 
independent  of  aid,  but  a  formidable  competitor  in  the 
markets  of  the  world.  The  extraordinary  development 
of  this  industry  during  the  period  between  1870  and  1895 
is  one  of  the  most  remarkable  chapters  in  the  remarkable 
economic  history  of  our  century.  The  discovery  of  the 
wonderful  beds  of  iron  ore  on  Lake  Superior;  the  fever- 
ish development  of  the  coal  deposits  of  the  middle  West ; 
the  amazing  cheapening  of  transportation  by  water  and 
rail ;  the  bold  prosecution  of  mining,  transportation,  manu- 
facturing, not  only  on  a  great  scale,  but  on  a  scale  fairly 
to  be  called  gigantic — all  these  revolutionized  the  con- 
ditions of  production.  They  called  for  resource  and  genius 
in  the  captains  of  industry;  enabled  the  bold,  capable, 
and  perhaps  unscrupulous  to  accumulate  fortunes  that 
rouse  the  uneasy  wonder  of  the  world ;  and  gave  rise  to 
new  social  conditions  and  grave  social  problems.  Some- 
thing of  the  same  sort  happened  in  the  growth  of  copper 
mining;  though  here  the  richness  of  the  natural  resources 
counted  far  more,  and  the  situation  in  general  was  more 
simple.  Among  the  forces  which  were  at  work  in  these 
industries,  protective  duties  probably  counted  for  much 
less  than  is  often  supposed.  An  eagle  eye  in  divining 
possibilities,  boldness  and  resource  in  developing  them, 
skill  and  invention  in  designing  the  most  effective  mechani- 
cal appliances, — these  forces  of  character  and  of  brains, 
developed  by  the  pressure  of  competition  in  a  strenuous 
community,  and  applied  under  highly  favoring  natural 
conditions,  explain  the  prodigious  advance. 


346  HISTORY  OF   THE  EXISTING   TARIFF. 

The  forces  which  so  completely  changed  the  situation 
of  the  iron  and  steel  Industry  were  most  actively  at  work 
through  the  decade  from  1880  to  1890.  By  1890  they 
had  worked  out  their  effects  on  such  a  scale  as  to  com- 
mand general  attention.  In  that  year,  for  the  first  time, 
the  production  of  pig  iron  in  the  United  States  exceeded 
that  of  Great  Britain.  The  enormous  output,  and  the 
cheapened  cost,  must  soon  have  brought  a  sharp  fall  in 
prices.  The  crisis  of  1893,  and  the  depression  which 
followed,  precipitated  the  fall,  and  soon,  as  is  the  com- 
mon effect  of  such  revulsions,  intensified  it.  Prices  of 
all  the  crude  forms  of  iron  and  steel  went  down  to  the 
foreign  level  and  even  below  it.  After  a  long  period  of 
gradual  but  rapid  change,  the  results  of  the  new  condi- 
tions in  the  industry  now  suddenly  worked  themselves 
out.  Not  only  was  the  domestic  market  fully  supplied, 
but  the  beginnings  of  an  export  movement  appeared. 
Imports  of  the  cruder  forms  of  iron  and  steel  ceased  en- 
tirely; and  the  more  highly  manufactured  forms  which 
continued  to  be  brought  in  were  mainly  "  specialties," 
made  by  unusual  processes  or  affected  by  exceptional 
conditions. 

Perhaps  the  most  striking  consequence  of  these 
changed  conditions  was  the  new  situation  as  to  steel 
rails.  With  the  aid  of  cheaper  pig  iron,  and  by  means 
of  improved  methods,  rails  were  made  as  cheaply  as  in 
Great  Britain,  if  not  more  cheaply.  The  combination 
which  had  succeeded  for  so  many  years  in  keeping  the 
price  of  rails  above  the  normal  point,  was  still  able  to 


TARIFF  ACT  OF  1897.  347 

hold  together  for  some  years  after  1893.  But  the  stress 
of  continued  depression,  slackened  demand,  and  sharper 
rivalry,  finally  caused  it  to  give  ^ay  in  1897,  and  the 
price  of  rails  dropped  abruptly.  The  duty  imposed  in  ' 
the  act  of  1897  (^6.72  per  ton)  was  nominal ;  for  domestic 
prices  were  as  low  as  foreign.  Doubtless,  in  the  future, 
such  a  duty,  like  those  of  former  acts,  might  facilitate 
another  combination  and  another  period  of  inflated 
prices.  But  for  the  time,  steel  rails  were  exported,  not 
imported,  and  at  all  events  the  period  when  protection 
could  be  said  in  any  sense  to  be  needed  had  clearly 
passed.1 

Another  consequence  of  the  changed  conditions  in  the 
iron  and  steel  industry  was  that  the  duty  on  tin  plate, 
a  bone  of  contention  under  the  act  of  1890,  was  dis- 
posed of,  with  little  debate,  by  the  imposition  of  a  com- 
paratively moderate  duty.  The  higher  duty  on  that 
article  in  the  act  of  1890  (2-}-  cents  .per  pound)  had  been 
advocated  by  protectionists  and  attacked  by  their  oppo- 
nents with  equal  bitterness.  Yet  the  reduction  in  1894 
(to  i-J-  cents)  had  aroused  little  comment;  while  in  1897, 
with  the  protectionists  in  full  command,  it  was  raised 
to  no  more  than  ij  cents,  again  with  little  comment. 
In  the  intervening  period  the  prices  of  the  steel  sheets 
from  which  tin  plates  are  made  (tin  plates  being  simply 
sheets  of  steel  coated  with  tin)  had  fallen  in  the  United 
States  in  sympathy  with  the  prices  of  all  forms  of  iron 
and  steel ;  and  this  not  only  absolutely,  but  as  compared 

1  See  the  figures  in  Appendix  V. 


348  HISTORY  OF  THE  EXISTING   TARIFF. 

with  the  prices  of  similar  articles  in  Great  Britain. 
Hence  even  the  duty  of  1894  was  as  effective  for  the 
purposes  of  promoting  the  manufacture  of  this  particular 
article,  as  had  been  the  higher  duty  of  1890;  while  that 
of  1897,  which  was  a  trifle  higher  than  that  of  1894,  was 
more  than  sufficient  to  maintain  the  protectionist  sup- 
port for  the  industry.  The  episode  was  certainly  a 
curious  one.  The  much-contested  duty  of  1890  went 
into  effect  just  at  a  time  when  the  general  development 
of  the  iron  and  steel  industry  was  preparing  the  way  for 
the  immediate  effectiveness  of  the  duty  in  stimulating  do- 
mestic production ;  while  the  rapid  fall  in  iron  and  steel 
prices  after  1890,  and  especially  after  1893,  enabled  the 
tin  plate  manufacture  to  hold  its  own,  after  a  brief  space, 
with  a  much  lower  duty  than  it  had  so  insistently  de- 
manded in  1890. 

A  part  of  the  act  which  aroused  much  public  attention 
and  which  had  an  important  bearing  on  its  financial  yield 
was  the  sugar  schedule — the  duties  on  sugar,  raw  and 
refined.  It  will  be  remembered  that  the  act  of  1890  had 
admitted  raw  sugar  free,  while  that  of  1894  had  imposed 
a  duty  of  40  per  cent,  ad  valorem.  This  ad -valor  em  rate 
had  produced  a  revenue  much  smaller  than  had  been  ex- 
pected, and,  indeed,  smaller  than  might  reasonably  have 
been  expected.  Notwithstanding  the  insurrection  in 
Cuba  and  the  curtailment  of  supplies  from  that  source, 
the  price  of  raw  sugar  had  maintained  its  downward  ten- 
dency ;  and  the  duty  of  40  per  cent,  had  been  equivalent 
in  1896  to  less  than  one  cent  a  pound.  In  the  act  of 


THE    TARIFF  ACT  OF  1897.  349 

1897  the  duty  was  made  specific,  and  was  practically 
doubled.  Beginning  with  a  rate  of  one  cent  a  pound  on 
sugar  tested  to  contain  75  per  cxent.,  it  advanced  by 
stages  until  on  sugar  testing  95  per  cent,  (the  usual  con- 
tent of  commercial  raw  sugar)  it  reached  1.65  cents  per 
pound.  The  higher  rate  thus  imposed  was  certain  to 
yield  a  considerable  increase  of  revenue.  Much  was  said 
also  of  the  protection  now  afforded  to  the  beet  sugar 
industry  of  the  West.  That  industry,  however,  was 
still  of  small  dimensions  and  uncertain  future.  The  pro- 
tection now  extended  to  it,  moreover,  was  no  greater 
than  had  been  given  by  the  sugar  duty,  even  higher  than 
that  of  1897,  which  had  existed  from  the  close  of  the 
civil  war  to  1890.  No  doubt  the  changed  conditions  of 
agriculture  and  of  the  methods  of  beet  sugar  manufacture 
might  cause  the  same  duty  to  have  a  greater  effect  at  the 
close  of  the  century  than  during  the  earlier  period.  But 
this  effect  could  come  but  slowly,  and  for  many  years 
the  sugar  duty  would  not  fail  to  yield  a  handsome 
revenue  to  the  Treasury ;  while  at  the  same  time  it  en- 
abled the  protectionist  party  to  pose  once  more  as  the 
faithful  friend  of  the  farmer. 

On  refined  sugar,  the  duty  was  made  1.95  cents  per 
pound,  which,  as  compared  with  raw  sugar  testing  100 
per  cent.,  left  a  protection  for  the  domestic  refiner, — i.  e., 
for  the  Sugar  "  Trust," — of  one  eighth  of  one  cent  a 
pound.  Some  intricate  calculation  would  be  necessary 
to  make  out  whether  this  ' '  differential ' '  for  the  refining  in- 
terest was  more  or  less  than  in  the  act  of  1894 ;  but,  having 


350  HISTORY  OF   THE  EXISTING  TARIFF. 

regard  to  the  effect  of  the  substitution  of  specific  for  ad- 
valorem  duties,  the  Trust  was  no  more  favored  by  the  act 
of  1897  than  by  its  predecessor,  and  even  somewhat  less 
favored.1  The  changes  which  this  part  of  the  tariff  act 
underwent  in  the  two  Houses  are  not  without  signifi- 
cance. In  the  bill  as  reported  to  the  House  of  Repre- 
sentatives by  its  committee,  and  as  passed  by  the  House, 
the  initial  rate  on  the  crudest  sugar  (up  to  75  degrees) 
was  the  same  as  that  finally  enacted,  one  cent;  but  the 
rate  of  progression  was  slower  (.03  cent  for  each  de- 
gree instead  of  .035),  and  the  final  duty  on  the  important 
classes  of  raw  sugar  in  consequence  somewhat  less.  The 
so-called  differential,  or  protection  to  the  refiners,  was 
one  eighth  of  a  cent  per  pound.  In  the  Senate  there 
was  an  attempt  at  serious  amendment.  The  influence  of 
the  Sugar  Trust  in  the  Senate  had  long  been  great.  How 
secured,  whether  through  party  contributions,  entangling 

1  The  rates  of  1897  were : 

On  raw  sugar  testing  up  to  75  degrees I        cent  per  Ib. 

For  each  additional  degree Y^fo    "         " 

Hence  raw  sugar  testing  95  degrees  pays 1.65     "         " 

And  raw  sugar  testing  100  degrees  pays 1.825  "         " 

Refined  sugar  pays 1.95     "         " 

Leaving  a  difference  between  the  refined  sugar  rate  and 

that  on  raw  sugar  at  the  100  degree  rate  of 125  " 

In  regard  to  sugar  coming  from  countries  paying  an  export  bounty,  the 
act  of  1897  made  a  change  from  the  methods  of  1890  and  1894,  when  a  fixed 
additional  duty  of  ^  cent  per  pound  had  been  imposed  on  bounty-fed 
sugar.  It  was  now  provided  in  general  terms  (in  section  5  of  the  act  of 
1897)  that  on  any  article  on  which  a  foreign  country  paid  an  export  bounty, 
an  additional  duty  should  be  imposed  "  equal  to  the  net  amount  of  such 
bounty  or  grant  "  ;  the  Secretary  of  the  Treasury  being  required  to  ascertain 
this  amount  in  each  case. 


THE    TARIFF  ACT  OF   1897.  351 

alliance,  or  coarse  bribery,  the  public  could  not  know ;  but 
certainly  great,  as  the  course  of  legislation  in  that  body 
demonstrated.  The  Senate  Finance  Committee  reported 
an  entirely  new  scheme  of  sugar  duties,  partly  specific 
and  partly  ad  valorem,  complicated  in  its  effects,  and 
difficult  to  explain  except  as  a  means  of  making  conces- 
sions under  disguise  to  the  refiners.  But  here,  as  on 
other  points,  the  Senate  treated  its  committee  with  scant 
respect,  threw  over  the  whole  new  scheme,  and  re-inserted 
the  rates  of  the  House  bill  on  raw  sugar,  but  with  an  in- 
creased differential,  amounting  to  one  fifth  of  a  cent,  on 
refined  sugar.'  So  the  bill  went  to  the  Conference  Com- 
mittee, with  the  differential  alone  in  doubt.  What  de- 
bates and  discussions  went  on  in  that  committee  is  not 
publicly  known.  It  is  one  of  the  curious  results  of  our 
legislative  methods  that  the  decisive  steps  are  often 
taken  in  star  chamber  fashion.  But  it  was  credibly  re- 
ported that  the  sugar  schedule  was  the  sticking-point, — 
that  on  this  schedule,  and  this  only,  each  branch  was 
obstinate  for  its  own  figures.  Finally,  the  Senate  gave 
way.  By  slightly  increasing  the  duty  on  raw  sugar,  and 
leaving  that  on  refined  at  the  point  fixed  by  the  Senate, 
the  House  secured  virtually  the  retention  of  the  status 
quo  as  to  the  differential  in  favor  of  the  Sugar  Trust. 
The  result  certainly  was  in  striking  contrast  to  that  of 
1894.  Then,  too,  there  was  a  struggle  between  the 
House  and  the  Senate  on  the  protection  of  the  Trust, — 
not  indeed  on  that  alone,  but  on  that  conspicuously. 
Then  the  House  had  proposed  to  wipe  out  all  duties, 


352  HISTORY  OF   THE  EXISTING   TARIFF. 

and  so  all  protection;  while  the  Senate  had  proposed  a 
substantial  largess  to  the  Trust.  After  a  struggle  much 
longer  than  that  of  1897,  the  House  had  given  way,  and 
its  leaders  had  been  compelled  to  make  a  mortifying 
concession  to  an  unpopular  policy.  The  outcome  in 
1897  was,  it  is  true,  in  substance  not  different.  The 
differential  was  the  same  under  the  act  of  1897  as  it  had 
been  under  that  of  1894;  and  the  increase  in  the  duty  on 
raw  sugar  once  more  enabled  the  refining  monopoly,  as 
the  one  large  importer,  to  make  an  extra  profit,  tem- 
porary but  handsome,  by  heavy  imports  hurried  in  before 
the  new  act  went  into  force.  But  the  moral  effect  was 
very  different.  The  House  in  1897  had  adopted  the 
plan  of  leaving  things  as  they  were,  and  had  successfully 
resisted  the  effort  of  the  refining  monopoly  to  secure 
more.  The  result  was  due  mainly  to  greater  party  co- 
hesion and  more  rigid  party  discipline,  enforced  by  the 
genial  despotism  of  the  autocratic  Speaker  of  the 
House. 

The  tariff  act  of  1894  had  repealed  the  provisions  as  to 
reciprocity  in  the  act  of  1890,  and  had  rendered  nugatory 
such  parts  of  the  treaties  made  under  the  earlier  act  as 
were  inconsistent  with  the  provisions  of  its  successor.1  The 
act  of  1897  now  revived  the  policy  of  reciprocity,  and  in 
some  ways  even  endeavored  to  enlarge  the  scope  of  the 
reciprocity  provisions.8  One  of  its  sections  recited,  in 
almost  the  exact  phraseology  of  the  act  of  1890,  that  the 


1  Section  71  of  the  act  of  1894. 

*  Sections  3  and  4  of  the  act  of  1897. 


THE   TARIFF  ACT  OF  1897.  353 

President,  if  satisfied  that  other  countries  imposed  duties 
that  were  "  reciprocally  unequal  and  unreasonable,"  might 
suspend  the  free  admission  of  certain  specified  articles — 
tea,  coffee,  tonka  beans,  and  varittla  beans — and  that 
these  articles  should  thereupon  be  subject  to  duty,  coffee 
at  three  cents  a  pound,  tea  at  ten  cents,  and  so  on.  The 
act  of  1890  had  held  out  the  threat  of  duties  as  to  some 
other  important  articles — sugar  and  hides.  But  these 
could  not  now  be  easily  used  for  the  reciprocity  clauses, 
being  dutiable  in  any  case.  Tonka  beans  and  vanilla 
beans,  even  though  imported  mainly  from  the  tropical 
parts  of  South  America,  were  hardly  weighty  substitutes. 
Quite  different  in  purpose,  and  designed  to  reach 
countries  of  the  same  rank  in  power  and  civilization  as 
the  United  States,  were  some  provisions  which  contem- 
plated not  fresh  duties,  but  a  reduction  of  those  imposed 
by  the  new  act.  In  the  first  place  the  President  was 
authorized,  "  after  securing  reciprocal  and  reasonable 
concessions,"  to  suspend  certain  duties,  and  to  replace 
them  by  duties  somewhat  lower.  The  articles  on  which 
reductions  could  thus  be  made  were  argol  (crude  tartar), 
brandies,  champagne,  wines,  paintings,  and  statuary. 
The  country  aimed  at  was  France.  The  higher  duties 
on  silks  in  the  new  act  would  especially  affect  this 
country,  and  might  tempt  her  to  reprisals.  Her  system 
of  maximum  and  minimum  duties,  adopted  in  1892,  was 
expressly  devised  as  a  means  of  securing  concessions  in 
commercial  negotiations.  Now  the  United  States  fol- 
lowed suit,  and  arranged  her  own  system  of  duties  in 


354  HISTORY  OF   THE  EXISTING   TARIFF. 

such  manner  that  concessions  were  provided  for  in 
advance. 

More  important  in  its  scope,  but  so  limited  as  regards 
time  and  conditions  as  to  promise  little  practical  result, 
was  the  next  section,  which  contemplated  commercial 
treaties  for  general  reductions  of  duties.  The  President 
was  authorized  to  conclude  treaties  providing  for  reduc- 
tions of  duty,  up  to  20  per  cent.,  on  any  and  every 
article.  But  the  treaties  must  be  made  within  two  years 
after  the  passage  of  the  act;  the  reductions  could  be 
arranged  only  through  a  period  not  exceeding  five  years ; 
and  the  treaties  must  be  ratified  by  the  Senate,  and 
further  "  approved  by  Congress,"  that  is,  by  the  House 
as  well  as  by  the  Senate.  The  other  reciprocity  arrange- 
ments, described  in  the  preceding  paragraphs,  did  not 
need  the  consent  even  of  the  Senate.  The  arrangement 
for  a  possible  general  reduction  of  duties  by  20  per  cent, 
was  not  contained  in  the  House  bill,  but  was  inserted  by 
the  Senate  in  the  course  of  its  amendments.  Restricted 
as  it  was,  the  chance  of  its  leading  to  any  change  in  the 
rates  of  duty  was  of  the  slightest.1 

An  important  aspect  of  the  new  act,  and  one  much  dis- 
cussed, was  its  fiscal  yield.  Designed  to  give  protection 
to  domestic  industries,  it  was  expected  also  to  bring  to 
the  Treasury  a  much-needed  increase  of  revenue.  This 
combination  of  industrial  and  fiscal  policy  is  too  common 

'  Under  the  first  described  of  these  reciprocity  plans,  commercial  agree- 
ments were  soon  reached  with  France,  Germany,  Italy,  and  Portugal.  No 
treaties  of  the  second  sort  were  ever  made. 


THE   TARIFF  ACT  OF  1897.  355 

in  the  history  of  the  United  States,  as  indeed  in  that  of 
other  countries,  to  have  aroused  much  comment.  Yet  it 
was  certainly  unfortunate  that  so  little  attention  was 
given  to  the  simple  question  of  revenue,  without  regard 
to  protection  or  free  trade.  Additional  taxes  on  beer  or 
on  tobacco  (not  to  mention  duties  on  tea  and  coffee), 
even  though  so  moderate  in  rate  as  to  have  been  little 
noticed  and  easily  born  by  consumers,  would  have 
yielded  a  large,  steady,  and  easily  collected  revenue. 
Proposals  for  taxes  of  this  sort  were  indeed  made  by  the 
Senate  Finance  Committee;  but  most  of  them  were 
struck  out  by  the  Senate  itself,  and  hardly  a  trace  re- 
mained in  the  act  as  passed.  A  slight  increase  in  the  tax 
on  cigarettes  and  a  modification  of  certain  rebates  in  the 
taxes  on  beer  alone  remained  as  simply  fiscal  measures. 
Barring  these  minor  changes,  protective  duties,  and  these 
only,  were  relied  on  to  convert  the  deficit  into  a  surplus. 
There  was  much  heated  discussion  immediately  after 
the  passage  of  the  act  as  to  its  effect  on  the  public  finan- 
ces; it  being  predicted  with  equal  confidence  that  it 
would  fail  to  secure  the  desired  revenue,  and  that  it 
would  convert  the  deficit  into  a  surplus.  It  was  cer- 
tainly to  be  expected  that, — once  the  heavy  imports 
rushed  in  just  before  the  passage  of  the  act  were  out  of 
the  way, — the  increased  duties  on  sugar,  on  wool  and 
woollens,  and  on  other  articles,  would  swell  the  revenue 
considerably.  But  how  much  ?  On  this  subject  the 
only  thing  certain  was  that  the  financial  effect  was  en- 
tirely uncertain.  All  calculations  as  to  the  fiscal  results  of 


HISTORY  OF   THE  EXISTING   TARIFF. 

such  customs  legislation  as  the  United  States  undertook 
in  1883,  in  1890,  in  1894,  and  in  1897,  rest  simply  on 
guesswork.  Supposing  the  imports  to  remain  the  same 
as  in  some  previous  year,  it  is  possible  to  state  what  a 
given  rate  of  duty  will  yield ;  but  no  one  can  foretell  with 
any  approach  to  accuracy  what  the  imports  will  be. 
This  is  more  particularly  the  case  with  imports  of  pro- 
tected articles,  and  so  with  the  revenue  derived  from 
them.  Such  an  article  as  sugar,  indeed,  once  the  rate  of 
duty  is  fixed,  yields  a  fairly  regular  amount.  Barring 
sugar,  we  have  in  the  main  dutiable  imports  that  fluctuate 
greatly  and  unexpectedly  from  year  to  year.  Even  with 
rates  unchanged,  it  is  impossible  to  know  in  advance 
with  any  degree  of  certainty  what  the  revenue  will  be. 
In  times  of  activity  imports  tend  to  rise,  and  the  revenue 
swells ;  in  times  of  depression  they  tend  to  fall,  and  the 
revenue  shrinks.  He  who  could  foretell  the  oscillation  of 
the  industrial  tides  would  have  something  on  which  to 
base  an  estimate  of  the  direction  at  least,  if  not  of  the 
rate,  in  the  movement  of  the  national  revenues.  But 
even  for  the  most  experienced  observer  and  under  stable 
rates  of  duty,  there  must  always  be  a  large  margin  of  un- 
certainty in  estimates  of  the  future  tariff  revenue.  With 
rates  much  changed,  no  estimate  can  be  more  than  a 
guess. 

The  discussions  as  to  the  revenue  to  be  expected  from 
the  act  of  1897  served  to  bring  into  vivid  relief  not  only 
the  haphazard  character  of  our  fiscal  methods,  but  the 
need  of  reform  in  the  general  financial  and  monetary 


THE    TARIFF  ACT  OF  1897.  357 

system.  One  of  the  arguments  urged  in  favor  of  its 
passage  was  that  an  increase  of  revenue  was  necessary  in 
order  to  enable  the  Treasury  to  fufill  its  obligations  for 
the  maintenance  of  gold  payments';  and  it  was  even 
maintained  that  a  surplus  was  the  one  thing  needful  to 
bring  about  a  sound  and  stable  monetary  situation.  No 
doubt,  as  things  had  stood  ever  since  the  resumption  of 
specie  payments  in  1879,  it  was  not  only  desirable  on 
grounds  of  every-day  prudence  that  the  revenue  should 
at  least  equal  the  expenditure,  but  this  was  important 
for  the  monetary  responsibilities  which  had  been  imposed 
on  the  Treasury  of  the  United  States.  It  was  clear,  how- 
ever, that  a  continuing  surplus,  and  the  unfailing  avoid- 
ance of  a  deficit,  were  not  to  be  expected.  A  large 
accumulated  surplus  tempts  to  reckless  expenditure,  as  it 
did  in  1890;  while  the  inevitable  periods  of  depression 
recurrently  cut  down  the  revenue,  and  make  occasional 
years  of  deficit  more  than  probable.  It  was  unfortunate 
that  the  questions  of  protection  to  domestic  industries 
and  of  revenue  for  the  government  should  be  interwined. 
This  source  of  difficulty,  which  had  so  much  affected 
tariff  legislation  in  1894  as  well  as  in  1897,  was  removed  in 
1900,  when  the  gold  standard  act  reorganized  the  Treasury 
and  set  aside  the  reserve  fund  of  150  millions  for  the 
security  of  the  paper  money.  Thereby  the  monetary 
system  was  made  independent  of  fluctuations  in  the 
general  revenue.  The  question  of  protection  and  free 
trade  still  remained  complicated  with  the  revenue  prob- 
lem of  the  government ;  and  this  was  inevitable,  as 


358  HISTORY  OF   THE  EXISTING   TARIFF. 

long  as  customs  duties  were  so  largely  relied  on  for 
meeting  the  national  expenses.  But  the  monetary 
problem  at  least  was  finally  separated  from  the  fiscal 
problem. 

The  tariff  of  1897,  like  that  of  1890,  was  the  outcome 
of  an  aggressive  spirit  of  protection.  As  in  1890,  much 
was  said  of  the  "  verdict  of  the  people  "  in  favor  of  the 
protective  policy.  Yet  the  election  of  1896  turned  on 
the  silver  question;  and  the  Democrats  in  1894  certainly 
had  much  more  solid  ground  for  maintaining  that  the 
popular  verdict  had  been  against  high-handed  protection 
than  the  Republicans  in  1897  that  it  had  been  in  favor  of 
such  a  policy.  Given  the  political  complications  of  1896- 
97,  it  was  no  doubt  inevitable  that  a  measure  imposing 
higher  duties  should  come.  But  the  act  of  1897  pushed 
protection  in  several  directions  farther  than  ever  before, 
and  farther  than  the  political  situation  fairly  justified. 
It  disheartened  many  who  had  supported  the  Republi- 
cans on  the  money  issue  in  1896;  and  even  good  party 
members,  loyal  to  the  general  policy  of  protection, 
doubted  whether  that  policy  had  not  now  been  carried 
too  far. 

The  new  and  unexpected  turn  thus  given  the  tariff 
history  of  the  United  States  was  the  more  regrettable 
because  the  general  trend  of  the  country's  develop- 
ment made  a  liberal  policy  at  once  easier  and  more 
inviting.  The  closing  years  of  the  century  found  new 
economic  conditions,  which  must  become  of  greater  and 
greater  consequence  for  our  customs  policy  as  the  next 


THE    TARIFF  ACT  OF  1897.  359 

century  is  seen  to  open  a  new  era.  The  United  States 
is  a  great  manufacturing  country ;  not  only  this,  but  one 
in  which  the  bulk  of  the  manufacturing  industries  is  no 
longer  seriously  dependent  on  protection.  The  changes 
in  the  metal  industries,  to  which  reference  was  made  in 
the  preceding  pages,  are  not  only  important  in  them- 
selves, but  are  of  far-reaching  consequence  for  the  gen- 
eral industrial  future  of  the  United  States.  Iron  and 
steel,  on  which  the  material  civilization  of  the  modern 
world  rests,  are  produced  more  abundantly  than  any- 
where else,  and  at  least  as  cheaply, — soon,  if  not  yet, 
will  be  produced  more  cheaply.  With  the  wide  diffusion 
of  a  high  degree  of  mechanical  ingenuity,  of  enterprise, 
of  intelligence  and  education,  it  is  certain  that  the 
United  States  will  be,  and  will  remain,  a  great  manu- 
facturing country.  The  protective  system  will  be  of  less 
and  less  consequence.  The  deep-working  causes  which 
underlie  the  international  division  of  labor  will  indeed 
still  operate,  the  United  States  will  still  find  her  advan- 
tages greater  in  some  directions  than  in  others,  and  the 
ingenuity  of  legislators  will  still  find  opportunity  to  direct 
manufacturing  industry  into  channels  which  would  not 
otherwise  be  sought.  But  the  absolute  effect,  still  more 
the  proportional  effect,  of  such  legislation  on  the  industrial 
development  of  the  country  will  diminish.  The  division 
of  labor  within  the  country  will  become  more  and  more 
important,  while  international  trade  will  be  confined  more 
and  more  to  what  may  be  called  specialties  in  manufac- 
tured commodities,  and  articles  whose  site  of  production  is 


360  HISTORY  OF   THE  EXISTING   TARIFF. 

determined  mainly  by  climate.  Not  only  sugar  (for  the 
present),  tea,  coffee,  and  the  like,  but  wool  also  belong  in 
the  class  last  mentioned,  as  to  which  climatic  causes  domi- 
nate ;  and  the  duties  on  wool,  with  those  on  woollens  in 
their  train,  are  thus  the  most  potent  in  bringing  a  substan 
tial  interference  with  the  course  of  international  trade. 
But,  on  the  whole,  protective  duties,  however  important 
they  may  be  in  this  detail  or  that,  cannot  seriously  affect 
the  general  course  of  industrial  growth,  and  will  affect  it 
less  and  less  as  time  goes  on.  In  any  case,  the  question 
for  the  future  will  be,  even  more  than  it  has  been  in  the 
past,  not  whether  the  United  States  shall  be  a  manufac- 
turing country,  but  in  what  directions  her  manufactures 
shall  grow, — whether  in  those  where  aid  and  protection 
against  foreign  competition  are  constantly  sought,  or  in 
those  where  natural  resources  and  mechanical  skill  enable 
foreign  competition  not  only  to  be  met,  but  to  be  over- 
come on  its  own  ground. 


CHAPTER  VIII. 

THE  TARIFF  ACT   OF    1909. 

THE  tariff  act  of  1897  proved  the  longest -lived  of  the 
general  tariff  acts  of  the  United  States.  Its  nearest  rival 
was  the  act  of  1846,  which  remained  undisturbed  for  eleven 
years.  That  of  1897  remained  in  force  for  twelve  years. 

This  comparative  stability  was  the  result  of  various 
causes.  The  fact  that  the  Republican  party,  which  passed 
the  Dingley  act,  was  in  power  continuously  during  the 
twelve  years  from  1897  to  1909,  naturally  made  changes 
less  likely.  But  the  tariff  act  of  1846  also  remained 
unchanged,  notwithstanding  a  great  political  shift,  for  a 
period  nearly  as  long ;  for,  as  will  be  remembered,  the  pro- 
tectionist whigs  came  into  power  in  1849,  anc^  remained 
in  control  till  1853.  Political  stability  hence  would  not 
seem  to  be  essential  to  tariff  stability.  More  important, 
doubtless,  was  widespread  prosperity.  This  followed  the 
enactment  of  the  Dingley  act,  and  was  ascribed  to  it  by 
the  protectionists.  Prosperity  as  widespread  had  followed 
the  act  of  1846.  In  the  earlier  case,  as  in  the  later,  the 
country  was  naturally  content  with  matters  as  they  stood, 
not  being  prompted  by  industrial  or  financial  troubles  to 
the  tral  of  a  remedy  through  changed  import  duties. 

361 


362  HISTORY  OF   THE  EXISTING   TARIFF. 

But  most  important  was  the  fact  that  at  both  periods 
other  great  problems  pressed  for  solution.  After  1846, 
the  slavery  question  came  more  and  more  to  the  fore,  and 
prevented  the  tariff  from  being  a  commanding  public  issue. 
After  1897,  the  questions  of  industrial  combination — trusts, 
railways,  monopolies — served  to  divert  attention  from 
the  tariff.  At  both  times,  the  public  (or  the  politicians) 
were  right,  in  concentrating  discussion  on  the  matters 
most  important.  Slavery  signified  much  more  than  the 
tariff,  during  the  generation  preceding  the  Civil  War. 
Industrial  combination  signified  much  more  in  the  open- 
ing years  of  the  twentieth  century ;  for  here  was  and  is 
the  great  problem  for  the  future. 

It  was  this  very  attention  to  a  different  subject,  how- 
ever, which  at  the  later  date  compelled  action  on  the 
tariff  once  more.  The  tariff  was  felt  to  need  overhauling 
because  it  was  believed,  rightly  or  wrongly,  to  promote 
combinations,  or  at  all  events  to  increase  the  profits  in 
great  protected  industries.  The  huge  fortunes  acquired 
in  some  protected  industries,  the  Carnegie  fortune  most 
conspicuously  of  all,  brought  the  feeling  against  monopo- 
lies and  trusts  to  bear  against  the  high  duties.  As  has 
already  been  said,1  the  trend  toward  combination  is  essen- 
tially a  consequence  of  increasing  large-scale  production. 
But  it  has  been  intensified  in  some  cases  by  protection, 
and  the  profits  of  some  "  trusts  "  have  been  greatly  swelled. 
The  two  things — trusts  and  the  tariff — are  much  associ- 
ated in  the  public  mind,  and  hostility  to  the  combinations 

1  See  pages  310,  316. 


THE    TARIFF  ACT  OF  1909.  363 

has  bred  hostility  to  extreme  protection.  Hence  the 
Republican  party  in  its  campaign  platform  of  1908  gave 
a  promise  of  revising  the  tariff ;  and  its  candidate,  soon 
to  become  President  Taft,  pledged  riis  efforts  to  secure  a 
revision — "revision"  being  understood  on  all  hands  to 
mean  primarily  reduction. 

The  Republican  platform  contained  a  new  version  of 
the  principle  on  which  protection  was  to  proceed  :  paraded, 
to  be  sure,  as  the  "true'*  or  "long-established  "  Repub- 
lican doctrine,  but,  nevertheless,  in  its  precision  of  state- 
ment substantially  new.  The  doctrine  was  laid  down  as 
follows :  "  In  all  protective  legislation  the  true  principle 
of  protection  is  best  maintained  by  the  imposition  of  such 
duties  as  will  equal  the  difference  between  the  cost  of 
production  at  home  and  abroad,  together  with  a  reason- 
able profit  to  American  industries." 

This  notion,  very  little  heard  of  before,1  played  a  surpris- 
ingly large  part  in  the  discussions  of  1908-09,  and  was 
hailed  in  many  quarters  as  the  definitive  solution  of  the 
tariff  question.  It  has  an  engaging  appearance  of  mod- 
eration ;  yet  it  leads  logically  to  the  most  extreme  results. 
It  seems  to  say, — no  favors,  no  undue  protection,  nothing 
but  equalization  of  conditions.  Yet  little  acumen  is  needed 
to  see  that,  carried  out  consistently,  it  means  simple  prohi- 
bition and  complete  stoppage  of  foreign  trade. 

Anything  in  the  world  can  be  made  within  a  country 

1  The  Republican  platform  of  1904  had  a  similar  phrase  :  "  The  measure 
of  protection  should  always  at  least  equal  the  difference  in  cost  of  production 
at  home  and  abroad."  This  seems  to  be  the  first  platform  statement  of  the 
"  true  principle  "  ;  but  very  little  attention  was  given  it  in  1904. 


364  HISTORY  OF  THE  EXISTING   TARIFF. 

if  the  producer  is  assured  of  "  cost  of  production  together 
with  reasonable  profits."  In  a  familiar  passage  of  the 
Wealth  of  Nations,  Adam  Smith  remarked  that  "  by  means 
of  glasses,  hotbeds,  and  hot  walls,  very  good  grapes  can 
be  raised  in  Scotland,  and  very  good  wine  can  be  made  of 
them  at  about  thirty  times  the  expence  for  which  at  least 
equally  good  can  be  brought  from  foreign  countries."  ' 
In  the  same  vein,  it  may  be  said  that  very  good  pineapples 
can  be  grown  in  Maine,  if  only  a  duty  be  imposed  sufficient 
to  equalize  cost  of  production  between  the  growers  in 
Maine  and  those  in  more  favored  climes.  Tea,  coffee, 
cocoa,  raw  silk,  and  hemp, — any  quantity  of  things  that 
are  now  imported  can  be  grown  in  the  United  States  pro- 
vided only  that  a  duty  high  enough  be  imposed.  No 
doubt  it  will  be  said  that  these  things  are  not  "  fitted  " 
for  our  natural  conditions,  and  that  duties  should  not  be 
"  unreasonably  "  high.  But  the  difference  is  simply  one 
of  degree.  Sometimes  a  moderate  duty  may  be  called  for 
in  order  to  "equalize  cost  of  production/'  sometimes  a 
very  high  duty.  Consistently  and  thoroughly  applied,  the 
"  true  principle  "  means  that  duties  shall  be  high  enough 
to  cause  anything  and  everything  to  be  made  within  the 
country,  and  international  trade  to  cease.2 

1   Wealth  of  Nations,  book  iv.,  ch.  ii.;  vol.  i.,  p.  423,  Cannan  edition. 

*  Unflinching  application  of  "  the  true  principle  "  was  not  often  advocated, 
but  the  following  extract  from  the  Congressional  Record  (May  17,  1909, 
p.  2182)  indicates  that  the  foremost  protectionist  leader  was  willing  to  go 
all  lengths. 

Mr.  ALDRICH.  Assuming  that  the  price  fixed  by  the  reports  is  the  correct 
one,  if  it  costs  10  cents  to  produce  a  razor  in  Germany  and  20  cents  in  the 
United  States,  it  will  require  100  per  cent,  duty  to  equalize  the  conditions 


THE   TARIFF  ACT  OF  1909.  365 

On  the  other  hand,  the  "  true  principle,"  consistently 
analyzed,  means  simply  that  the  more  disadvantageous 
it  is  for  a  country  to  carry  on  an  industry,  the  more  des- 
perate should  be  the  effort  to  cause  the  industry  to  be 
established.  Of  course  the  term  "  cost  of  production  " 
is  used,  in  these  discussions,  in  the  sense  of  the  money 
advances  that  must  be  made  by  the  employing  capitalists. 
The  more  labor  that  must  be  employed  at  current  wages 
to  get  a  given  article  to  market,  the  larger  these  money 
advances  become.  In  other  words,  they  are  large  because 
(for  whatever  reason)  much  labor  is  required  per  unit  of 
product ;  that  is,  because  the  efficiency  of  labor  is  low. 
One  of  the  most  familiar  facts  of  industry,  though  one  most 
commonly  forgotten  in  the  protective  controversy,  is  that 
high  money  wages  do  not  necessarily  mean  high  prices  of 
the  things  produced.  When  labor  is  effective,  high  wages 
and  low  prices  go  together.  Obviously  the  community 
is  prosperous  precisely  in  proportion  as  this  combination 
exists, — high  wages  and  low  prices.  But  where  labor  is 
ineffective,  there,  if  money  wages  be  high,  high  prices  will 
ensue.  The  more  of  high-priced  labor  that  must  be  em- 
ployed in  order  to  produce  a  given  article,  the  higher  will 

in  the  two  countries.  .  .  .  And  so  far  as  I  am  concerned,  I  shall  have  no 
hesitancy  in  voting  for  a  duty  which  will  equalize  the  conditions. 

Mr.  BAILEY.  The  Senator  from  Rhode  Island  would  vote  unhesitatingly 
for  a  duty  of  300  per  cent. 

Mr.  ALDRICH.     If  it  was  necessary 

Mr.  BAILEY.     If  he  thought  it  was  necessary. 

Mr.  ALDRICH.  Certainly.  If  it  was  necessary  to  equalize  the  conditions, 
and  to  give  the  American  producer  a  fair  chance  for  competition,  other 
things  being  equal,  of  course,  I  would  vote  for  300  per  cent,  as  cheerfully  as 
I  would  for  50." 


366  HISTORY  OF   THE    EXISTING   TARIFF. 

be  its  "cost  of  production/'  and  the  higher  must  be  the 
duties  in  order  to  "  equalize  cost  of  production  at  home 
and  abroad." 

All  the  current  notions  on  this  topic  among  the  staunch 
protectionists  rest  on  the  belief  that  high  wages  (high 
money  wages,  that  is, — few  go  beyond  this  phase  of  the 
problem)  cannot  be  maintained  in  our  American  com- 
munity unless  there  be  protection  against  the  commodities 
made  by  cheaper  labor  abroad.  And  this  belief  rests  on 
the  notion1  that  high  wages  necessarily  mean  high  prices.1 
The  truth  is  that  a  high  general  level  of  real  wages  is  the 
outcome  of  high  general  efficiency  of  labor.  Given  such 
efficiency,  it  would  continue,  tariff  or  no  tariff.  But  this 
seems  to  the  protectionists  an  incredible  proposition.  The 
verdict  of  the  economists,  though  practically  unanimous 
against  the  protectionist  belief,  has  no  visible  effect  in 
overthrowing  it.  That  high  wages  are  due  to  the  tariff, 
and  cannot  be  kept  high  without  high  duties,  has  been 
dinned  in  the  ears  of  the  public  so  persistently  that  it  has 
become  for  the  average  man  an  article  of  faith.  To  con- 
nect high  wages  with  the  effectiveness  and  productiveness 
of  labor ;  to  consider  whether  it  is  worth  while  to  direct 
labor  into  industries  where  it  is  not  effective ;  to  reflect 
what  it  really  means  to  "  equalize  "  a  high  domestic  cost 
of  production  with  a  lower  foreign  cost ;  in  fact,  to  reason 
carefully  and  consistently  on  the  tariff  question, — all  this, 

1  On  the  general  subject  of  the  connection  between  money  wages,  prices, 
and  international  trade,  I  have  stated  my  conclusions  in  a  paper  on  "  Wages 
and  Prices  in  Relation  to  International  Trade,"  Quarterly  Journal  of  Eco- 
nomics, August,  1906  (vol.  xx.,  p.  497). 


THE    TARIFF  ACT  OF  1909.  367 

unfortunately,  is  almost  unknown.  The  average  employer 
and  the  average  laborer  alike  accept  the  familiar  catch- 
words and  fallacies :  let  us  stimulate  employment,  make 
demand  for  labor,  create  the  home  market,  equalize  cost 
of  production,  preserve  American  industries  and  the 
American  standard  of  living. 

None  the  less,  the  attention  given  to  this  "  true  prin- 
ciple "  was  significant  of  some  concession  to  those  who 
believed  that  protection  had  been  carried  too  far.  There 
was  an  uneasy  feeling  that  duties  had  been  more  than  suf- 
ficient to  "equalize,"  and  that  they  brought  more  than 
"a  reasonable  profit"  to  American  producers.  As  every 
one  conversant  with  our  tariff  system  knows,  they  were 
often  excessive  in  this  sense.  They  were  higher  than 
was  necessary  to  enable  the  domestic  producers  to  hold 
their  own.  A  vast  number  of  the  duties  were  simply 
prohibitory.  Many  were  innocuous  as  well  as  prohibitory, 
— mere  nominal  imposts,  on  articles  produced  as  cheaply 
within  the  country  as  without,  and  not  importable  under 
any  conditions.  Such  were  the  duties  on  wheat,  corn, 
cattle  and  meat,  and  other  agricultural  products, — dust  in 
the  farmer's  eyes.  Such  too  were  the  duties  on  cheaper 
cotton  goods,  on  boots  and  shoes,  and  many  other  manu- 
factured articles.  On  still  others  the  rates,  while  so  high 
as  to  prohibit  importation,  were  not  nominal :  cost  of  pro- 
duction might  be  higher  in  the  United  States  than  abroad, 
yet  only  a  little  higher,  so  that  the  duties  went  beyond  the 
point  of  mere  "equalizing."  Such  for  example  was  the  case 
with  certain  grades  of  woollens  and  silks.  In  the  absence 


368  HISTORY  OF  THE  EXISTING  TARIFF. 

of  any  importation  of  competing  goods  (the  woollens  and 
silks  that  continued  to  be  imported  were  mainly  special 
articles,  different  from  the  domestic  textiles)  it  was  difficult 
to  calculate  just  how  far  any  equalizing  duty  at  all  might 
be  needed,  on  the  basis  of  "the  true  principle."  But  it  is 
certain  that  existing  rates  were  much  more  than  equalizing.1 
A  disposition  to  scan  duties  critically  according  to  their 
conformity  to  the  "  true  principle  "  was  shown  by  the 
Ways  and  Means  Committee  of  the  House,  in  which  the 
consideration  of  the  tariff  measure  began.  The  chairman  of 
that  committee,  Mr.  Payne,  though  a  staunch  protectionist, 
was  not  a  fanatical  one.  On  sundry  schedules  the  inquiries 
of  the  Committee,  under  his  leadership,  were  directed 
toward  a  comparison  of  domestic  and  foreign  cost,  and  a 
comparison  again  of  the  difference  in  cost  with  the  rates  of 
duty.9  It  is  true  that  inquiries  of  this  sort,  conducted  in 

1  Senator  Aldrich,  on  introducing  the  Conference  Report  which  settled  the 
details  of  the  tariff  act  of  1909  (see  below,  p.  376),  said  •  "  If  there  are  any 
prohibitive  duties  in  this  bill,  if  there  are  any  duties  that  are  excessive  along 
the  lines  I  have  laid  down  [the  true  principle],  I  do  not  know  it.  I  do 
not  believe  there  are  any  duties  levied  in  this  bill  that  are  excessive  or  are 
prohibitory."  Congr.  Record,  vol.  44,  p.  5305.  This  could  be  nothing  but 
bravado. 

8  Mr.  Payne's  attitude  is  indicated  in  the  following  passage  from  his  speech 
introducing  the  bill: 

"  Some  gentlemen  think  in  order  to  be  protectionists  that  after  they  have 
found  out  the  difference  between  the  cost  of  production  here  and  the  cost 
abroad  they  ought  to  put  on  double  that  difference  by  way  of  a  tariff  rate, 
and  they  are  willing  to  vote  for  such  a  provision  in  the  bill,  and  if  crowded 
they  will  go  to  three  times  that  amount.  I  do  not  believe  that  such  a  man 
is  a  good  friend  of  protection.  I  believe  we  should  fix  these  duties  as  nearly 
as  we  can  at  the  difference  between  the  cost  here  and  the  cost  abroad,  and 
not  after  we  have  decided  what  that  difference  is,  double  it,  add  100  per 
cent,  to  it.  ...  He  is  the  better  friend  to  protection  who  tries  to  keep 


THE    TARIFF  ACT  OF  1909.  369 

hearings  before  Congressional  Committees,  can  lead  to  no 
accurate  results.  The  persons  who  appear  as  witnesses 
are  almost  invariably  interested  producers,  and  the  figures 
and  statistics  presented  by  them  ^re  of  very  doubtful 
value.  Any  one  who  looks  over  the  reports  of  these 
hearings  must  observe  how  vague  and  obviously  exag- 
gerated are  the  recurring  statements  about  wages  and 
cost  of  production.  If  accurate  information  on  these 
matters  were  desired,  the  effective  method  would  be  to 
engage  agents  or  "  experts,'*  say  from  the  Bureau  of  the 
Census  or  the  Bureau  of  Corporations,  and  give  them  a 
year  or  two  in  which  to  make  careful  investigation.  Even 
so,  in  view  of  the  variations  of  cost  of  production  in  dif- 
ferent establishments,  and  the  difficulty  of  selecting  the 
representative  firms,  it  may  be  questioned  how  far  usable 
results  could  be  got.  At  all  events,  no  such  systematic 
procedure  was  thought  of.  The  usual  array  of  indiscrimi- 
nate figures  was  presented  and  printed,  with  a  natural 
tendency  on  the  part  of  the  protectionists  to  accept  with- 
out question  statements  indicating  that  their  "  true  prin- 
ciple "  could  be  maintained  only  by  keeping  duties  very 
high.1 

the  rates  reasonably  protective  to  the  people  engaged  in  the  industry." 
Congr.  Record,  p.  7. 

It  should  be  noted,  to  Mr.  Payne's  credit,  that  his  speech  introducing  the 
tariff  bill  was  a  very  careful  one,  explaining  with  much  detail  the  changes 
proposed.  In  this  fullness  of  detail  it  was  in  marked  contrast  with  the  flam- 
boyant and  'empty  speeches  with  which  Messrs.  McKinley  and  Dingley 
introduced  in  the  House  the  tariff  bills  of  1890  and  1897. 

1  The  hearings  of  1908—09  before  the  Ways  and  Means  Committee  were 
prolonged,  and  contained,  in  addition  to  the  usual  mass  of  irrelevant  and 
M 


370  HISTORY  OF   THE  EXISTING   TARIFF. 

The  hearings  before  the  House  Committee  led  to  a 
curious  and  instructive  episode.  It  is  significant  of  the 
trend  of  international  competition  that  the  rivals  most 
frequently  held  up  as  menacing  by  the  petitioners  for 
higher  duties  were  the  Germans,  not,  as  in  the  hearings  of 
earlier  periods,  the  English.  The  statements  in  regard  to 
wages  in  Germany  were  so  loose  and  exaggerated  that  the 
Germans  were  led,  both  by  pride  and  by  a  hope  of  affect- 
ing the  course  of  legislation  here,  to  take  notice  of  them. 
Their  government  referred  the  printed  hearings  to  various 
firms  in  Germany.  A  whole  sheaf  of  comments  and 
memoranda  from  such  sources  was  transmitted  by  the 
German  Foreign  Office  to  our  Department  of  State,  and 
by  this  to  the  Senate.  They  reached  the  Senate  Com- 
mittee on  Finance  early  in  April,  and  slumbered  there  for 
a  month.  In  May  some  of  the  so-called  "  insurgent " 
Senators  asked  for  them,  and  they  were  ordered  to  be 
printed.  But  they  were  not  printed  or  published  until 
August,  after  the  adjournment  of  Congress.  It  was  said, 
in  explanation  of  the  delay,  that  the  government  printing- 
office  was  so  busy  as  to  be  unable  to  bring  them  out  earlier. 
But  this  was  a  flimsy  pretext.  Anything  that  Congress 

useless  matter,  much  material  valuable  for  the  student  of  economics.  They 
were  printed,  too,  with  more  care  than  had  been  shown  on  previous  occasions, 
in  eight  volumes,  arranged  by  topics,  and  well  indexed. 

There  were  no  hearings  before  the  Senate,  though  there  were  unreported 
"conferences"  between  the  members  of  the  Senate  Finance  Committee  and 
persons  interested  in  the  duties.  Senator  Aldrich,  in  discussing  various 
details,  referred  to  figures  as  to  cost  of  production  presented  to  his  Committee 
by  domestic  producers  ;  but  such  figures,  not  subject  even  to  the  test  of  pub- 
licity, had  still  less  weight  than  those  presented  to  the  House  Committee. 


THE  TARIFF  ACT-OF  1909.  371 

really  wanted  was  supplied  with  exemplary  promptness. 
The  truth  was  that  the  ruling  spirits  in  the  Senate  did  not 
wish  the  information  to  be  put  at  the^disposal  of  opponents. 
For  this  they  had  good  ground.  The  figures  given  by 
American  producers  as  to  wages  in  Germany,  and  other 
figures  supposed  to  prove  differences  in  cost  of  production, 
were  shown  to  be  virtually  worthless,  and  not  a  little 
instructive  information  was  given  on  the  general  aspects 
of  tariff  rivalry.  But  probed  and  sifted  information  was 
not  desired  by  the  Republican  leaders,  or  at  least  by  those 
who  guided  the  course  of  action  in  the  Senate.  Any  sort 
of  vague  and  exaggerated  statement  as  to  wages  and  cost 
was  readily  accepted,  and  made  the  occasion  for  a  drastic 
application  of  the  sanctified  "true  principle."1 

Two  sets  of  reductions  in  duties  engaged  the  special 
attention  of  the  House  Committee :  on  iron  and  steel, 
and  on  certain  raw  materials.  The  conspicuous  position 
of  the  Steel  Corporation  compelled  attention  to  the  former. 
To  the  point  of  removal  of  the  iron  and  steel  duties  the 
Committee  would  not  go ;  but  some  reductions  were 
proposed.  The  raw  materials  most  discussed  were  coal, 
lumber,  iron  ore,  hides.  These  the  Committee  proposed 
to  admit  free  of  duty.  As  to  the  fate  of  these  proposals 
more  will  be  said  presently. 

On  the  other  hand,  some  advances  in  duty  were  frankly 
proposed,  usually  on  the  ground  that  the  "  true  principle  " 
called  for  them.  The  duties  on  mercerized  cottons — fab- 

1  The  German  reports  were  finally  printed  as  Senate  Document  No.  68, 
Part  2,  6  ist  Congress,  ist  session. 


372  HISTORY  OF   THE  EXISTING   TARIFF. 

rics  treated  by  a  process  which  gives  them  a  silk-like  sheen 
— were  advanced,  because  of  "  the  additional  labor  and 
the  difference  in  the  cost  of  labor."  The  duties  on  wo- 
men's gloves  and  on  certain  sorts  of  hosiery  were  similarly 
increased.  Other  advances  could  be  less  easily  defended 
on  grounds  of  this  sort,  and  were  the  obvious  result  of 
pressure  from  some  geographical  district,  or  from  some 
legislator  who  had  to  be  placated.  Zinc  ore,  previously  free, 
was  subjected  to  duty  because  the  people  of  the  Missouri 
zinc  mining  district  insisted  on  their  share  in  the  benefits 
of  protection.  The  duty  on  split  peas  was  increased, — 
a  petty  matter,  worth  noting  only  because  of  the  explana- 
tion of  the  change, — on  "  the  personal  knowledge  and 
evidence  of  a  member  of  the  House  who  knows  all  about 
the  business."  *  The  duties  on  some  fruits — figs,  prunes, 
lemons — were  raised,  as  a  sop  to  the  California  members. 
There  were  other  instances  of  this  sort — advances  of  rates 
proposed  because  some  member  of  the  Committee  had  a 
constituent  who  was  interested  in  a  particular  article,  or 
because  the  Committee  felt  it  necessary  to  make  sure  of 
the  vote  of  a  given  region.  None  the  less,  the  House  bill 
made  significant  reductions :  none  of  revolutionary  char- 
acter, or  likely  to  have  serious  economic  effects,  yet  indica- 
tive of  a  disposition  to  bring  about  some  "real  "  revision. 
No  great  changes  from  the  Committee's  rates  were  made 
in  the  House  itself.  Notwithstanding  active  debate,  and 
a  vigorous  attempt  by  interested  representatives  to  retain 

1  I  quote  from  Mr.  Payne's  speech  introducing  the  bill,  Congr.  Record, 
vol.  44,  p.  9- 


THE   TARIFF  ACT  OF  1909.  373 

duties  as  against  the  proposed  extension  of  the  free  list, 
the  bill  passed  by  the  House  was  substantially  that  pre- 
pared by  the  Committee.  On  the  hotly  debated  items  of 
coal,  hides,  iron  ore,  the  Committee 'was  sustained:  they 
were  left  on  the  free  list.  On  lumber,  the  leaders  could 
not  hold  the  House ;  a  duty  was  retained,  but  at  half  the 
existing  rate. 

In  the  Senate  the  course  of  events  was  different.  In 
most  of  the  tariff  acts  of  the  previous  generation,  the  in- 
fluence of  the  Senate  on  legislation  had  been  greater  than 
that  of  the  House,  and  had  been  exercised  in  favor  of  higher 
duties.  The  greater  influence  of  the  Senate  was  the  natural 
result  of  its  smaller  size,  its  compactness,  and  the  longer  term 
of  its  members.  That  this  influence  should  be  exercised  so 
often  in  the  direction  of  higher  duties,  has  been  ascribed 
to  the  greater  subservience  of  Senators  to  large  monied 
interests.  There  is  truth  in  the  charge.  In  legislation  on 
other  subjects  also,  especially  during  the  contest  over  rail- 
way legislation,  it  appeared  that  the  Senate  was,  if  not 
the  stronghold,  at  least  the  stronger  hold  of  those  corpora- 
tions and  industries  whose  money-making  might  be  affected 
by  legislation.  But  so  far  as  the  tariff  was  concerned, 
another  circumstance  was  at  least  equally  important  in  ex- 
plaining the  ultra-protectionism  of  the  Senate.  Each  State 
is  equally  represented.  Montana  and  West  Virginia  have 
as  many  votes  as  New  York  and  Iowa.  The  Senators 
from  a  thinly  populated  State  have  disproportionate 
power  in  fighting  for  duties  that  are  for  the  interest  of 
their  constituents,  or  are  supposed  to  be.  Geographical 


374  HISTORY  OF  THE  EXISTING   TARIFF. 

representation  in  the  Senate,  as  well  as  the  relation  be- 
tween the  individual  members  resulting  from  senatorial 
courtesy  in  confirming  appointments,1  is  thus  peculiarly 
favorable  to  log-rolling.  The  votes  of  small  dissatisfied 
States  cannot  be  ignored,  as  they  can  in  the  House. 
Washington,  Idaho,  Montana,  Wyoming,  West  Virginia, 
will  easily  combine  in  favor  of  duties  on  coal  and  on 
hides,  and  together  constitute  a  formidable  phalanx. 
The  strictly  manufacturing  States,  such  as  Massachusetts 
and  Pennsylvania,  feel  it  necessary  to  conciliate  such  a 
group,  and  to  let  them  have  duties  on  their  local  products, 
in  order  to  secure  their  adhesion  to  the  general  protec- 
tionist scheme.  The  log-rolling  process,  as  has  been  said 
by  President  Lowell,  is  the  great  evil  of  democratic 
government ;  and  that  evil  nowhere  appears  more  con- 
spicuously than  in  the  dealings  of  a  body  like  the  American 
Senate  with  tariff  legislation. 

Nevertheless,  there  was  a  vigorous  protest  from  within 
the  ranks  of  the  Republican  party.  The  Senators  from 
some  of  the  great  agricultural  States  of  the  Middle  West- 
Wisconsin,  Iowa,  Nebraska,  Minnesota — stood  staunchly 
for  reductions  in  duties.  Their  constituencies,  more  strong- 
ly than  any  other  part  of  the  country,  felt  hostility  to  real 
and  supposed  monopolies.  They  represented  the  healthy 
uprising  against  monied  domination,  the  resolution  to 
grapple  with  the  great  social  and  industrial  problems  of 
the  twentieth  century.  No  doubt  the  tariff  was  less 

1  Compare  the  extract  given  below  (p.  379,  note),  from  Mr.  Payne's 
remarks  as  to  the  duty  on  hides  in  1897. 


THE    TARIFF  ACT  OF  1909.  375 

closely  connected  with  those  problems  than  they  and  their 
representatives  supposed.  A  combination  and  monopoly 
were  smelled  behind  every  high  dn£y,  even  though  (as  in 
the  case  of  the  cotton  manufacture)  the  conditions  clearly 
were  not  those  of  monopoly.  No  doubt,  too,  there  was  the 
usual  half-heartedness  and  inconsistency  in  their  attitude 
on  the  general  question.  They  were  taunted  with  being 
unfaithful  to  their  party  and  even  (after  the  common 
question-begging  way  of  the  fanatical  protectionists)  with 
being  enemies  to  their  country  and  allies  of  designing  for- 
eigners. To  this  they  replied  that  they  were  the  true  and 
faithful  and  reasonable  protectionists.  Even  these  critics 
never  planted  themselves  on  any  ground  of  clear-cut 
principle.  They  simply  represented  a  strong  feeling  of 
unrest  and  discontent,  which  the  leaders  in  the  Senate 
disregarded  on  the  tariff  as  on  other  questions. 

The  combination  of  local  interests  in  the  Senate  was 
made  the  more  effective  by  the  leadership  of  Senator 
Aldrich.  Senator  Aldrich,  unlike  the  House  leader,  was 
a  protectionist  of  the  most  unflinching  type.  At  the  same 
time  he  had  had  long  experience  and  was  exceptionally 
well  informed  on  tariff  details.  His  influence  went  far  to 
account  for  the  amendments  made  in  the  Senate.  These 
were  no  less  than  847  in  number ;  many  of  them,  to  be 
sure,  merely  on  matters  of  form  and  phraseology,  but 
over  half  of  substantial  importance.  Their  drift  was  up- 
wards. The  much  debated  raw  materials,  iron  ore,  hides, 
coal,  were  again  made  subject  to  duties;  the  duty  on 
lumber  was  raised  above  the  rate  fixed  in  the  House. 


376  HISTORY  OF   THE  EXISTING   TARIFF. 

The  duties  on  cotton  goods,  hosiery,  and  other  manufac- 
tures were  advanced.  Many  of  the  changes  substituted 
specific  for  ad  valorem  duties,  or  shifted  the  dividing  line 
in  the  progression  of  specific  duties.  Just  what  such 
changes  mean  is  often  difficult  for  even  the  most  expert 
to  ascertain.1  It  is  tolerably  certain  that,  made  under 
such  auspices,  they  would  tend  in  general  to  tighten  the 
extreme  protective  system,  and  were  likely  to  embody 
"jokers," — new  rates  of  real  importance,  advantageous 
to  particular  producers,  and  concealed  in  the  endless 
details. 

So  the  bill  went  to  a  Conference  Committee,  and  there, 
as  usual,  its  details  were  finally  settled.  The  Conference 
Committee  consisted  of  eight  members  from  each  house, 
five  Republicans  and  three  Democrats.  The  Democrats 
were  put  on  the  Committee  only  pro  forma.  The  ten 
Republicans  from  the  two  houses  got  together  by  them- 
selves, and  came  to  an  agreement,  against  which  the  six 
Democrats  simply  registered  the  stock  partisan  protest. 
Such  has  been  the  procedure  with  all  the  tariff  legislation 
of  the  last  generation.  What  passed  in  the  Conference 
Committee  can  only  be  guessed,  but  guessed  with  some 
certainty :  weary  sessions,  hurried  procedure,  give  and 
take,  insistence  by  this  or  that  member  among  the 
ten  on  some  duty  in  which  he  is  particularly  inter- 

1  "Some  of  these  amendments  I  have  studied  diligently,  and  I  am  not 
able  to  say  to-day  whether  they  raise  or  lower  the  rates,  and  have  not  been 
able  to  determine  yet  with  the  aid  of  gentlemen  who  are  experts  on  this 
subject." — Mr.  Payne,  in  the  brief  House  debate  on  the  Senate  amendments, 
Congr.  Record,  p.  4468. 


THE    TARIFF  ACT  OF  1909.  377 

ested.  Irresponsibility  in  legislation  reaches  its  acme.1 
In  one  respect  a  new  influence  was  brought  to  bear  on 
the  Conference  Committee,  and  a'hew  responsibility  was 
assumed.  The  administration  suddenly  brought  pressure 
to  bear  in  favor  of  the  House  rates,  or  rather  in  favor  of 
lower  rates  all  around.  President  Taft  had  pledged  his 
party,  during  the  campaign,  to  undertake  a  revision  of  the 
tariff  downward ;  and  it  had  been  given  out,  apparently 
on  good  authority,  that  he  would  veto  a  bill  that  failed 
to  carry  out  the  pledge.  During  the  long  debates  in  both 
houses,  he  had  abstained  from  any  serious  effort  to  in- 
fluence the  course  of  legislation.  But  at  the  very  last 
stage — it  is  not  certain  whether  from  a  sudden  change  of 
tactics,  or  in  pursuance  of  a  policy  kept  till  then  deliber- 
ately in  the  background — he  took  the  position  of  titular 
head  of  the  party,  and  urged  reductions  in  duties.  His 
outspoken  attitude  strengthened  the  moderate  element, 
and  finally  brought  about  a  measure  less  stultifying  in 
view  of  his  own  pledges  than  had  seemed  possible  when 
the  bill  first  went  to  the  Conference  Committee. 

1  The  following  episode  will  serve  as  illustration.  The  duty  on  shingles 
had  been  30  cents  per  thousand  in  1897.  The  Senate  proposed  to  raise  it 
to  50  cents  a  thousand,  and  this  higher  rate  was  finally  enacted.  Mr.  Payne 
gave  the  following  account  of  what  took  place  in  the  Conference  Committee: 
"  This  20  cents  a  thousand  on  shingles  *  *  *  was  most  strenuously 
insisted  on.  Any  of  you  gentlemen  who  have  been  on  Committees  of  Con- 
ference know  how  those  things  are.  Senator  So-and-So  wants  something  and 
must  have  something.  Finally  I  told  them  I  was  willing,  in  this  great  trade 
on  the  lumber  schedule,  involving  millions  of  dollars,  to  throw  in  a  jack- 
knife  like  shingles,  and  gave  them  the  rate  of  50  cents.  *  *  *  They  claimed 
it  was  absolutely  essential  to  the  business.  I  never  could  see  it  in  that  light, 
but  was  in  favor  of  the  rate  of  the  Dingley  bill." — Congr.  Record,  p.  4698. 


378  HISTORY  OF   THE  EXISTING    TARIFF. 

The  most  hotly  disputed  single  item  was  the  duty  on 
hides.  These  had  been  free  of  duty  from  1872  to  1897. 
In  1897  they  had  been  subjected  to  a  duty  of  fifteen  per 
cent.,  on  the  insistent  demand  of  the  representatives  of 
the  grazing  States,  especially  Montana.1  The  House 
passed  the  bill  of  1909  with  hides  free ;  the  Senate,  again 
at  the  insistence  of  the  grazing  States,  proposed  to  restore 
the  duty  of  fifteen  per  cent.  Instead  of  a  compromise,  in 
the  shape  of  a  reduced  rate,  such  as  might  have  been 
expected  to  result  from  this  disagreement,  complete 
abolition  of  the  duty  was  finally  secured.  This  victory 
of  good  sense  was  clearly  due  to  President  Taft,  and  con- 
stituted the  one  conspicuous  fulfilment  of  his  pledge  to 
bring  about  really  lowered  duties. 

On  any  but  the  most  extreme  protectionist  principles, 
there  is  no  excuse  for  a  duty  on  hides.  There  can  be 
nothing  in  the  nature  of  protection  to  young  industries — 
no  prospect  of  ultimate  cheapening  through  a  stimulus 
to  improved  domestic  production.  Even  the  "  true " 
principle  of  equalized  cost  of  production  could  not  be 
applied  to  a  by-product  of  a  flourishing  export  industry. 
Nor  were  any  arguments  of  this  sort  presented  in  favor 
of  the  duty.  The  case  was  put  frankly  on  the  ground  of 
give  and  take ;  if  everything  is  to  be  protected,  why  not 
hides  ? 2  And  on  this  ground,  the  ranching  representatives 

1  The  duty  of  1897  applied  only  to  cattle  hides.  Calf-skins,  goat-skins, 
sheep-skins,  horse-hides,  and  the  like  continued  throughout  to  be  free  of 
duty. 

8  Mr.  Payne  gave  the  following  account  of  the  way  in  which  the  duty  on 
hides  came  to  be  imposed  in  1897  : 


THE  TARIFF  ACT  OF  1909.  379 

had  a  case.  If  imports  are  bad  per  se,  and  domestic  supply 
is  good  per  se,  why  should  hides  be  free  when  wool,  hemp, 
flax,  lumber,  ore,  remained  dutiable? 

It  happened,  too,  that  the  duty  on  hides  had  not  been, 
like  so  many  on  crude  products,  of  limited  effect.  The 
imports  were  a  considerable  portion  of  the  total  supply, 
and  the  imported  and  domestic  hides  came  in  competition 
in  the  same  market.1  The  case  was  one  where  the  pro- 
tective duty  had  its  full  effect:  the  price  of  the  whole 
domestic  supply,  as  well  as  of  that  imported,  was  raised 
by  the  amount  of  the  duty.  It  is  striking  that  a  country  in 
which  cattle-raising  has  been  largely  carried  on,  and  from 
which  meat-products  have  been  largely  exported,  should 
have  imported  quantities  of  hides.  The  demand  for 
this  joint  product,  or  "  by-product,"  is  relatively  great  in  the 

**  When  the  Dingley  bill  came  before  the  House,  reported  by  the  Com- 
mittee, it  was  reported  with  free  hides,  and  I  saw  a  number  of  gentlemen 
on  this  [the  Republican]  side  of  the  House,  and  a  number  of  gentlemen  on 
the  other  side  of  the  House,  led  by  Jerry  Simpson  of  Kansas,  voting  for  a 
duty  on  hides.  He  was  a  little  more  frank  than  some  of  these  modern-day 
tariff- for-re venue  people.  He  said  he  wanted  to  get  his  share.  He  did  not 
believe  in  a  duty  on  hides,  but  he  wanted  to  get  his  share.  *  *  *  It  went 
over  into  the  Senate.  We  did  not  have  a  Republican  majority  in  the  Senate 
in  those  days,  but  we  did  have  a  majority  of  those  who  claimed  to  be  pro- 
tectionists, and  one  of  these  protectionists  of  populistic  tendencies  would  not 
vote  for  the  bill  unless  it  carried  a  duty  on  hides,  and  the  Senate  accom- 
modated him.  That  is  one  of  the  courtesies  of  the  Senate  when  any  member 
wants  something  done" — Congr.  Record,  p.  21. 

1  In  an  elaborate  statement  compiled  by  the  Census  Bureau,  on  "  Imports, 
Exports,  and  Domestic  Manufactures,"  the  following  figures  were  given  as 
to  cattle  hides : 

Pounds  Values 

Imports  (1904-5)  in  mill.  14.5  mill,  dollars. 

Domestic  Product  (1904)       456  mill.  44.2  mill,  dollars. 


380  HISTORY   OF   THE  EXISTING    TARIFF. 

United  States.  No  satisfactory  substitute  has  been  found 
for  leather,  whether  for  footwear,  harness,  belting,  or  the 
other  manifold  uses  ;  and  our  prosperous  and  well-equipped 
population  calls  for  great  quantities  of  it. 

Other  raw  materials  were  treated  in  more  gingerly 
fashion,  and  the  original  proposal  for  admitting  them  free 
was  not  carried  out.  Coal,  which  the  House  had  proposed 
to  admit  free,  was  finally  subjected  in  the  act  to  a  duty  of 
45  cents  a  ton,  in  place  of  the  1897  rate  of  67  cents.  Iron 
ore,  which  also  the  House  had  proposed  to  make  free,  was 
made  dutiable  at  15  cents,  in  place  of  40  cents.  It  has 
already  been  noted  that  the  proposal  for  free  admission 
of  lumber,  made  by  the  Ways  and  Means  Committee, 
could  not  be  carried  even  through  the  House.  The  duty 
there  was  set,  on  the  lowest  grade,  at  $1.00  (per  thousand 
feet);  the  Senate  proposed  $1.50;  the  act  finally  made 
the  rate  $1.25,  in  place  of  the  1897  rate  of  $2.00. 

On  wood-pulp  and  printing  paper  a  long  struggle  led 
finally  to  no  change  as  regards  pulp,  and  on  printing  paper 
to  but  a  slight  reduction.  The  situation  was  complicated 
by  bickering  with  Canada,  from  which  came  a  considerable 
part  of  the  supply  of  the  raw  material,  pulp-wood  (the 
round  logs).  Pulp-wood  had  always  been  admitted  free  ; 
nor  was  any  change  on  this  score  contemplated  or  made. 
The  Canadians  wished  to  manufacture  their  own  raw 
material ;  hence  one  of  their  provinces  (Ontario)  prohibited 
the  export  of  the  logs,  and  another  (Quebec)  established 
what  was  virtually  an  export  duty.1  Both  in  the  United 

1  The  Quebec  legislation  consisted  in  reducing  the  royalty  for  wood  cut  on 


THE    TARIFF  ACT  OF   1909.  381 

States  and  in  Canada,  more  particularly  in  the  former, 
there  was  protest  against  the  wastage  of  the  spruce 
forests ;  and  in  the  United  States  there  were  also  charges 
of  trust  manipulation  of  the  price  of  paper.  A  special 
Congressional  Committee,  appointed  at  an  earlier  date, 
had  recommended,  after  elaborate  investigation,  that  the 
duties  on  paper  be  lowered  and  that  pulp  be  admitted 
free ;  both  changes  to  be  conditional  on  the  repeal  by 
Canada  of  her  restrictive  legislation.  In  the  tariff  act  as 
passed  these  recommendations  were  followed,  though  the 
reduction  in  the  paper  duty  was  made  less  by  the  Senate 
than  had  been  provided  by  the  House.  Both  the  House 
and  Senate  bills,  and  the  act  as  passed,  provided  for 
additional  duties  on  pulp,  and  on  paper  also,  if  the  Cana- 
dian regulations  should  stand.  The  expectation  seems 
to  have  been  that  the  Canadians  would  yield,  especially 
as  they  were  to  be  threatened  also  by  a  general  increase 
of  duties  under  the  maximum  and  minimum  clause  of 
the  tariff  act.1  But  our  legislators  had  reckoned  wrong. 
Canada  refused  to  budge.  She  had  sought  for  two 
decades  after  the  termination  (in  1866)  of  the  old  recipro- 
city treaty  to  reestablish  friendly  commercial  relations 
with  the  United  States.  Her  offers  had  been  steadily  and 
almost  ostentatiously  repulsed.'  The  "  National  Policy" 
of  protection,  adopted  in  Canada  at  the  outset  largely  by 

crown  lands,  ordinarily  65  cents  a  cord,  to  40  cents  a  cord  if  the  wood  were 
manufactured  within  the  province.  Both  in  Quebec  and  Ontario  wood  cut 
on  crown  lands  alone  was  affected. 

1  See  below,  p.  403. 

2  See  Mr.  Edward  Porritt's  Sixty  Years  of  Protection  in  Canada,  ch.  iii. 


382  HISTORY  OF   THE  EXISTING   TARIFF. 

way  of  retaliation,  had  been  gradually  made  stronger  and 
more  sweeping.  By  1909  it  had  such  a  firm  hold  that 
there  was  no  thought  of  submitting  to  what  seemed  a 
bullying  attitude  on  the  part  of  the  United  States.  No 
change  in  the  restrictions  on  pulp-wood  was  offered. 
Consequently  the  conditional  relaxations  of  our  own 
duties  on  pulp  and  paper  never  went  into  effect.1 

As  to  all  the  changes  on  materials,  there  is  a  question 
how  far  reductions  or  remissions  will  redound  merely  to 
the  advantage  of  the  manufacturer  or  middleman,  how  far 
to  that  of  the  "  ultimate  consumer."  Free  hides,  it  was 
said,  would  benefit  only  the  tanners  or  the  shoemakers, 
but  the  price  of  shoes  would  not  be  affected.  The  answer 
obviously  is  that  the  case  is  the  same  with  every  cause 
lessening  the  price  of  materials, — improved  processes, 
better  transportation,  and  what  not.  The  final  result  in 

1  The  duty  on  wood-pulp  remained,  as  it  had  been  in  1897,  ^  cent  a 
pound,  plus  an  additional  duty  equal  to  the  Canadian  export  charge. 

The  duties  on  printing  paper  in  1897  and  1909  were  (on  the  lowest  class, 
— they  were  graded)  as  follows  : 

Duty  of  1897  Duty  of  1909 

$6.00  per  net  ton,  ordinary  duty        $3.75  per  net  ton,  ordinary  duty 
.50  additional  duty  because  2.00       "         "     retaliatory  duty 

of  Quebec  export  charge  .35       "         "     additional  duty 

because  of  Quebec  export  tax 

$6.50  total  duty  $6.10  total  duty 

The  retaliatory  and  additional  duties  were  levied  only  on  pulp  and  paper 
made  from  timber  cut  on  the  crown  lands  of  the  restricting  Provinces  ;  not 
on  all  imports  coming  from  Canada. 

The  Congressional  Committee,  referred  to  in  the  text,  printed  an  enor- 
mous mass  of  testimony  on  the  pulp  and  paper  situation,  and  prefaced  it 
with  an  excellent  summary  report. 


THE    TARIFF  ACT  OF  1909.  383 

cheapening  consumers'  goods  may  come  slowly  and  halt- 
ingly ;  but  so  long  as  there  is  effective  competition  among 
the  several  series  of  producers  and  middlemen,  and  so 
long  as  there  is  a  cheapening  of  the/materials  for  all  those 
engaged  in  supplying  a  given  market,  the  legislator  may 
feel  safe  in  providing  for  free  materials. 

No  doubt  the  cheapening  of  materials  sometimes  affects 
only  a  part  of  the  market.  Lower  duties  on  coal  and 
lumber,  or  their  free  admission,  have  but  a  limited  range 
of  influence.  Free  coal,  as  has  already  been  said,1  would 
be  of  some  advantage  to  coal-users  in  New  England  and 
the  extreme  Northwest  ;  though  in  both  districts  the  pos- 
sible consequences  were  much  exaggerated  both  by  advo- 
cates and  opponents.  Free  lumber  would  lead  to  slightly 
larger  importation  from  Canada  along  the  eastern  frontier, 
but  probably  to  none  of  any  moment  in  the  Northwest. 
It  would  check  a  bit,  even  if  only  a  bit,  the  wastage  of  our 
own  forests,  and  in  so  far  was  clearly  sound  policy.  Not  a 
few  Southern  representatives  voted  for  the  retention  of 
the  duty  on  lumber,  and  their  votes  turned  the  scale  in 
its  favor.  Yet,  both  because  of  geographical  limitation 
of  competition  and  because  of  the  different  quality  of 
Southern  lumber,  the  duty  was  of  no  real  consequence  for 
their  constituents.  The  attitude  both  of  constituents  and 
representatives  illustrated  the  state  of  veritable  funk  con- 
cerning lower  duties  (not  to  mention  free  trade)  which  had 
been  induced  by  the  constant  shouting  about  safeguarding 
American  industries  against  pauper  labor.  Iron  ore  (on 

1  See  p.  298. 


HISTORY  OF  THE  EXISTING  TARIFF. 

which  the  duty  was  reduced  from  40  to  15  cents  a  ton) 
presented  a  case  where  the  effect  of  lowered  duties  was  even 
more  limited.1  All  that  can  be  said  is  that  in  some  degree 
competition  would  be  promoted,  and  some  better  op- 
portunity given  for  the  development  of  the  iron-making 
industry  of  the  Eastern  region. 

On  iron  and  steel  the  process,  begun  in  1890,'  of  re- 
ducing duties  no  longer  of  any  effect,  was  carried  a  step 
further.  The  rates  were  lowered  along  the  whole  range, 
as  will  be  seen  from  the  following  typical  figures : 

Duty  of  1897  Duty  of  1909 

Pig  iron                                     $4.00  ton  $2.50  ton 

Scrap  iron  and  steel                   4.00   "  i.oo   " 

Steel  Ingots  (lowest  class)        6.72    "  3.92    " 

Steel  Rails                                  7.84   "  3.92   " 

Tin  Plate                                    i£  c.  a  pound  i£  c.  a  pound 

Nobody  supposed  that  these  changes  were  of  any  con- 
sequence. The  time  had  gone  by  when  the  duties  on 
crude  iron  and  steel  had  any  considerable  effect.  The 
''true  principle,"  if  rigorously  applied  to  the  vast  inte- 
grated enterprises  which  now  constituted  the  representative 
firm  in  iron-making,  would  have  led  to  the  complete  repeal 
of  all  these  duties. 

A  word  may  be  said  with  regard  to  steel  rails,  which 
had  played  so  important  a  part  in  the  tariff  history  of 
earlier  years.  As  the  figures  in  the  Appendix  show,3 

1  Seep.  271. 

1  See  pp.  272,  300,  342.    Compare  also  what  is  said  below,  at  p.  402,  note, 
of  the  increase  in  1909  of  the  duty  on  structural  steel. 
3  See  Appendix  V. 


THE   TARIFF  ACT  OF  1909.  385 

prices  in  the  United  'States  were,  after  1 897,  on  the  whole 
lower  than  prices  in  England.  Imports  virtually  ceased, 
being  limited  to  sporadic  cases  of  special  shapes  or  out-of- 
the-way  shipments.  The  duty  might  have  been  the  occa- 
sion for  a  rise  in  American  prices  during  years  of  active 
demand,  such  as  were  those  from  1900  to  1906.  Yet  in 
fact  the  price  was  singularly  constant, — it  was  $28.00  a  ton 
uniformly  from  1902  on.  This  steady  price  was  the  result 
of  a  combination  between  the  various  rail-makers.  The 
general  policy  of  the  great  Steel  Corporation,  which  pro- 
duced more  than  half  of  the  rails,  and  was  dominant  in 
the  "gentlemen's  agreement  "  that  settled  the  price,  was 
to  mitigate  fluctuations  in  iron  and  steel,  and  keep  the 
industry  on  a  more  even  keel  than  in  previous  times. 
The  situation  may  be  fairly  adduced  as  illustrating  the 
possible  benefits  of  combination  in  making  the  course  of 
trade  less  haphazard.  In  the  case  of  steel  rails  this  policy 
was  more  successful  than  with  other  iron  products,  because 
the  railways  themselves  had  largely  passed  the  stage  of 
speculative  and  fluctuating  construction,  and  consequently 
called  for  more  regular  supplies  of  rails.  At  all  events, 
the  price  of  rails  remained  steady  for  a  long  series  of 
years.  It  must  be  said,  too,  that  the  price  was  not  only 
steady,  but  moderate.  Very  likely,  even  at  this  moderate 
price,  profits  were  good ;  but  at  all  events,  the  price  was 
not  usually  higher  than  the  price  abroad,  and  in  most 
years  even  lower ;  and  profits  were  not  made  higher  by 
protection.  To  repeat  what  was  said  before,  the  iron  and 
steel  duties,  for  good  or  ill,  had  done  their  work.  They 
25 


386  HISTOR  Y  OF   THE    EXISTING   TARIFF. 

no  longer  played  an  important  part  in  the  tariff  contro- 
versy, and  were  no  longer  of  any  considerable  economic 
consequence.1 

With  the  free  admission  of  hides  came  reductions  in 
duties  on  corresponding  manufactures, — on  leather  from 
20  per  cent,  to  5  per  cent.,  on  shoes  from  25  per  cent,  to 
10,  on  harness  and  saddlery  from  35  per  cent,  to  20.  These 
reductions  were  insisted  on  by  the  ranching  representatives, 
with  a  touch  of  vindictiveness,  as  the  counterpart  of  free 
hides,  and  were  somewhat  grudgingly  accepted  by  the 
representatives  of  the  leather  and  shoe  districts.  Here 
again  no  one  supposed  that  any  real  changes  would  ensue 
from  the  lowered  duties.  Tanning  and  shoemaking  are 
among  the  industries  in  which  American  labor  is  applied 
with  resource  and  advantage,  in  which  high  wages  and 
low  prices  are  made  possible  by  efficiency  and  ingenuity, 
and  in  which  there  are  exports,  not  imports.  The  hesita- 
tion in  acceding  to  the  reduced  duties  arose  chiefly  from 
that  pusillanimity  about  foreign  competition  which  per. 
vades  almost  the  whole  manufacturing  community. 

In  the  case  of  shoes,  of  which  the  exports  are  consider- 
able, it  was  said  that  not  only  American  shoes  were  being 
exported,  but  American  shoe-machinery  also,  and  that 
after  a  time,  when  foreigners  had  learned  to  use  this 
machinery,  their  lower  wages  would  enable  them  to  send 
cheaper  shoes  back  to  the  United  States.  Of  course  it  is 

1  The  steel-rail  situation  should  be  considered  in  connection  with  the 
general  development  of  the  iron  manufacture.  See  what  is  said  above, 
pp.  301,  344,  and  the  Quarterly  Journal  of  Economic*  August,  1900, 
vol.  xiv.,  p.  500. 


THE    TARIFF  ACT  OF  1909.  387 

true  that,  for  any  American  manufacturing  industry 
subject  to  possible  foreign  competition,  the  price  of  in- 
dependence is  unceasing  progress.,  To  hold  its  own,  and 
to  pay  current  high  wages,  it  must  not  only  have  the  lead, 
but  keep  the  lead.  It  must  continue  to  advance  steadily, 
with  new  ways  and  better  processes,  as  fast  as  competitors 
adopt  its  established  improvements.  The  history  of  in- 
dustry, and  especially  that  of  English  industry  in  its  long 
contest  with  foreign  rivals,  indicates  that  probably  it  can 
keep  the  lead.  Imitative  competitors  usually  remain  in 
the  rear.  They  are  constantly  left  behind  by  those  whose 
ways  they  copy.  Certainly  there  is  nothing  to  indicate 
that  a  different  result  has  appeared  or  is  impending  as 
to  those  American  manufactures  which  had  long  reached 
the  stage  of  independence  and  of  export,  such  as  sewing- 
machines,  tools  and  hardware,  agricultural  implements, 
electrical  apparatus,  and  these  very  boots  and  shoes. 

As  had  been  the  case  with  all  the  tariff  acts  since  the 
Civil  War,  that  of  1909  brought  advances  in  the  duties  as 
well  as  reductions.  Some  of  these  advances  were  made 
in  good  faith  for  the  purpose  of  getting  more  revenue ; 
some  were  for  the  purpose  of  rectifying  real  or  supposed 
errors  or  inconsistencies  in  previous  acts ;  and  some  were 
intended,  openly  or  with  subterfuges,  to  give  additional 
protection. 

On  cotton  goods  advances  were  made  both  for  rectifica- 
tion of  old  duties  and  for  the  imposition  of  new.  In 
some  cases  unexpected  interpretations  by  the  courts  of 
the  language  of  the  act  of  1897  had  caused  very  low  duties 


388  HISTORY  OF   THE   EXISTING    TARIFF. 

on  certain  cotton  textiles.  A  few  changes,  prepared  for 
the  purpose  of  making  these  rates  about  the  same  in  range 
as  those  on  other  goods,  were  not  unreasonable,  and 
indeed,  from  the  point  of  view  even  of  a  moderate  protec- 
tionist, were  imperative.1  Other  changes  were  made, 
however,  with  the  avowed  purpose  of  promoting  some 
domestic  industry  and  adding  to  the  sweep  of  the  pro- 
tective system.8  The  duty  on  mWcerized  cottons,  already 
referred  to,  was  advanced  by  imposing  an  extra  cent  per 
yard  on  goods  treated  by  this  process.  The  duties  on 
certain  grades  of  cotton  hosiery — seamless  or  fashioned 
hose — were  advanced,  chiefly  on  the  cheaper  grades.* 
A  minor  item,  but  one  which  caused  some  discussion, 
was  the  duty  on  razors,  in  which  a  very  considerable 
increase  was  made.4  By  far  the  most  important  and 
systematic  advance  was  that  in  the  silk  schedule.  It  will 

1  These   changes    were    explained  by  Senator  Aldrich,    Congr.  Record, 
p.  2847  ffy*     An  analogous  change  was  made  on  pocket  knives  ;  parts  (un- 
assembled) being  made  dutiable  at  the  same  rates  as  completed  knives. 

2  For  a  careful  analysis  of  the  changes  on  cottons,  see  a  brief  article  by 
Mr.  M.  T.  Copeland  in  the  Quarterly  Journal  of  Economics \  Feb.,  1910, 
p.  422  ;  and  one  by  Mr.  S.  M.  Evans,  in  the  Journal  of  Political  Economy, 
December,  1910,  on  "  The  Making  of  a  Tariff  Law." 

3  The  rates  on  seamless — fashioned  or  shaped — cotton  hose  stood  thus  in 
the  acts  of  1897  and  1909 : 

Classification  Duty  of  1897  Duty  of  1009 

Value  up  to  $1.00  a  dozen  $  .50  c.  a  dozen,  plus  15%  9  .70  c.  a  dozen,  plus  15% 
"  $1.00  (5>  1.50  "                         .60  .85 

41  $1.50  @  2.00  "  .70  .90 

44  $2.00  @  3.00  "     "  1.20       "     "  "  1.20       "      " 

"     $3-00  @  5.00    "        "  2.00          "        "  "  2.00          "        " 

4     over  $5.00    4I  55%  55% 

It  will  be  seen  that  the  increase  was  solely  in  the  specific  duties  ou  the  lower 
classes,  and  had  most  effect  on  the  cheaper  goods  within  each  class, 

4  The  changes  on  razors  were  as  follows.     The  specific  duties  throughout 
were,  per  dozen : 


THE    TARIFF  ACT  OF  1909.  389 

be  remembered  that  in  1897  an  elaborate  system  of  specific 
duties  on  silks  had  been  substituted  for  the  previous  ad 
valorem  rates.1  In  1909  the  House  left  unchanged  the 
specific  duties  as  fixed  in  1897;  but  the  Senate  com- 
pletely overhauled  them.  The  silk  schedule,  intricate 
before,  became  more  intricate  than  ever,  and  only  a  person 
well  versed  in  the  trade  could  make  out  the  meaning  and 
probable  effect  of  the  changes.  But  it  was  clear  on  the 
face  of  it  that  the  specific  duties  were  advanced  through- 
out and  that  they  replaced  more  and  more  the  ad  valorem 
duties, — a  change  no  doubt  of  probable  administrative 
advantage,  but  the  pretext  in  this  act,  as  so  often  before, 
for  a  substantial  increase  in  the  effective  rates.  It  is  note- 
worthy that  neither  in  1897  nor  in  1909  was  there  any  but 
the  slightest  explanation  of  the  new  silk  duties.  In  1897, 
when  Mr.  Dingley  introduced  the  House  bill  containing 
them,  he  did  not  refer  to  this  schedule."  In  1909  they 
appeared  for  the  first  time  in  the  Senate  bill.  There  were 
no  public  hearings  before  the  Senate  Committee,  and  the 
new  silk  duties,  like  the  new  cotton  duties,  were  the 
result  of  private  conferences  with  the  domestic  producers, 
perhaps  also  with  customs  officials.  They  were  not 
mentioned,  or  barely  mentioned,  when  the  Senate's  bill 

Act  of  1897  Act  °f  T9°9 

Value  up  to  $1.50,  duty  50  c.  plus  15%  Value  up  to  $1.00,  duty  35% 

'     $1.00  to  i  50,  .72  plus  35% 

"  $1.5010    3.00,     tk     $1.00  plus  15%  *     $1.50102.00,  $i. 20  plus  35% 

'      $2.00  to  3.00,  11.44  Plus  35% 

over  $3.00,     "     $1.75  plus  20%  over  $3.00,  $1.80  plus  35% 

1  See  p.  337. 

*  There  was,  however,  in  1897,  much  debate  on  the  silk  duties  by  the 
Senate.     See  Mason,  The  American  Silk  Industry ',  p.  89. 


390  HISTORY  OF   THE    EXISTING   TARIFF. 

was  reported.  Nor  was  much  said  about  them  in  the 
debates.  The  intricacy  of  the  schedule,  and  the  difficulty 
of  making  out  its  meaning,  may  account  for  this  lack  of 
discussion.  It  is  certain  that  a  systematic  increase  was 
made  in  a  series  of  duties  already  very  high.1 

Both  as  to  cottons  and  silks,  the  advances  in  duty  were 
defended  on  the  ground  that  the  articles  were  luxuries, 
and  therefore  properly  subject  to  high  rates  for  revenue 
purposes.  It  is  true  that  the  changes  affected  chiefly  the 
finer  grades  of  both  textiles.  But  the  avowed  object  of 
those  who  secured  the  new  rates  was  to  check  the  imports 
and  promote  domestic  production,  not  to  secure  a  revenue 
from  the  imports.  The  defence  of  the  new  rates  on  this 
ground  was  an  afterthought.  It  is  not  improbable  that 

1  One  illustration  will  indicate  the  nature  of  the  changes  in  the  silk  duties. 
In  1897  the  duties  on  silk  piece  goods  weighing  i\  to  8  ounces  square 
yard,  had  been  arranged  in  classes,  the  duty  being  so  much  on  goods  con- 
taining 20$  and  less  of  silk,  more  on  goods  containing  20%  to  30$  silk,  still 
more  if  containing  30  to  45 £  of  silk  ;  then  further  differentiated  according  as 
they  were  or  were  not  dyed  or  printed.  In  1909  a  new  classification  was 
made.  Light-weight  goods,  if  to  z\  ounces  per  square  yard,  were  set 
apart,  and  subjected  to  higher  duties;  those  weighing  more  (2^  to  8  ounces) 
were  also  subjected  to  higher  duties,  though  not  in  the  same  degree  as  the 
light-weight  goods.  The  following  were  the  changes  on  the  cheapest  goods, 
containing  the  least  percentage  of  silk  : 

1897  1909 

Containing  up  to  20%  of  silk,  Containing  up  to  20%  silk, 

weighing  i|  to  8  oz.  per  yard,  weighing  ij  to  2$  02.  per  yard, 

in  the  gum duty  50  c.  Ib.  in  the  gum 70  c.  Ib. 

dyed  or  printed  etc. ..."     60  c.  Ib.  dyed  or  printed  etc 85  c.  Ib. 

The  same,  weighing 
2}  to  8  oz.  per  yard 

in  the  gum 57 \  c.  Ib. 

dyed  or  printed  etc 80  c.  Ib. 

Similar  advances  were  made  on  all  the  classes,  the  duties  rising  as  the 
percentage  of  silk  became  greater,  and  being  throughout  higher  than  the 
duties  of  1897. 


THE    TARIFF  ACT  OF  1909.  39! 

on  the  first  imposition  of  higher  duties,  the  revenue  will 
increase,  imports  continuing.  But  as  domestic  products 
take  the  place  of  the  imports,  the  revenue  dwindles. 
Protection  and  revenue  are  inconsistent  objects  ;  the  more 
effective  the  protection  (and  the  main  object  of  the 
changes  on  cottons  and  silks  was  to  make  it  more  effective) 
the  more  certain  the  loss  of  revenue. 

All  these  were  cases  in  which  duties  already  very  high 
were  put  up  still  another  notch.  The  question  arises,  why 
should  imports  have  continued  to  pour  in  notwithstanding 
the  previous  heavy  duties,  and  why  should  such  extreme 
rates  have  been  demanded  by  the  domestic  producers  ?  I 
suspect  that  the  answer  is  the  same  in  all  these  cases.  It  is 
that  the  commodities  are  made  by  methods  not  adapted 
to  American  ways  of  efficiency.  In  this  country  manufac- 
turing efficiency  comes  by  the  use  of  highly-developed 
machinery,  continuous  operation,  standardized  processes, 
and  interchangeable  parts.  Where  methods  of  this  kind 
can  be  employed,  the  American  employer  can  pay  high 
wages  and  yet  sell  at  low  prices  ;  very  likely  he  can  export. 
Where  he  uses  much  direct  labor  and  few  labor-saving 
appliances,  where  he  tries  to  make  few  goods  of  any  pat- 
tern, he  cannot  compete  with  the  countries  of  low  wages 
and  handicraft  efficiency.  Just  why  the  American  ma- 
chine-using ways  should  be  applied  with  success  in  some 
directions  and  should  fail  in  others,  is  often  difficult  to 
explain,  and  indeed  constitutes  one  of  the  most  intricate 
problems  in  industrial  history.  The  young-industries 
argument  may  sometimes  apply  The  very  introduction 


392  HISTORY  OF  THE    EXISTING   TARIFF. 

of  the  new  branch  into  the  country  may  turn  invention 
in  that  direction  and  bring  about  the  development  of 
labor-saving  processes.  But  the  fact  that  extremely  high 
duties  are  demanded  is prima  facie  an  indication  that  the 
field  is  not  a  promising  one  for  this  sort  of  development. 

At  all  events,  in  all  these  cases  of  duties  shoved  higher 
and  higher,  great  cost  of  direct  labor  was  urged, — of  course 
with  the  usual  exaggeration  and  the  usual  jeremiads  about 
the  cheap  labor  of  foreign  countries.  The  seamless  stock- 
ings on  which  duties  were  raised  were  of  the  kind  not 
knitted  complete  by  the  marvellous  self-acting  machinery 
of  the  modern  knitting  frame.  They  must  be  finished 
and  shaped  by  hand  ;  and  this  fact  probably  explained  why 
they  continued  to  be  imported.  Mercerized  cottons,  as 
one  of  the  advocates  of  the  duty  said  with  emphasis,1 
called  for  an  unusual  amount  of  labor,  and  therefore — on 
the  "  true  principle  " — for  an  unusually  high  duty.  On 
silks,  the  duties  were  highest,  and  the  importations  at  the 
same  time  most  likely  to  continue,  in  case  of  the  very 
cheap  and  the  very  dear  classes  of  goods.  The  same  was 
the  case  with  many  articles  of  hardware,  such  as  pocket- 
knives.  In  both  instances  it  was  the  medium-grade  goods, 
used  and  made  in  large  quantities,  that  gave  scope  for 
machinery  and  standardized  processes. 

It  hardly  need  be  said  that  no  one  explanation  can  fit 
all  the  complications  of  industry.  The  continuance  of 
importations  in  the  face  of  high  duties  sometimes  is  due 

1  See  the  speech  of  Senator  Lodge,  June  i;  pp.  12,  13  of  the  separate 
pamphlet  reprint  of  this  speech. 


THE   TARIFF  ACT  OF  1909.  393 

to  the  simple  fact  that  foreign  producers  are  technically 
in  advance,  and  the  demand  for  still  higher  duties  is  made 
because  the  domestic  producers  have  failed  to  keep  abreast 
of  them.  While  protection  in  the^United  States  has  not 
usually  caused  slackening  of  progress,  it  has  in  some  cases 
done  so.  This  is  one  of  the  most  important  questions  of 
fact  in  regard  to  the  increase  or  retention  of  a  particular 
duty,  but  one  which  received  no  attention  in  the  talk 
about  cost  of  production  and  the  "true  principle." 
Razors,  for  example,  seemed  to  be  made  by  more  effective 
methods  in  Germany  than  in  this  country;  although,  as 
to  the  modern  safety  razor,  the  reverse  was  the  case.  In 
chemical  products  and  dyes  the  Germans  certainly  had 
the  lead,  and  higher  duties  seemed  to  be  simply  props 
for  the  industrially  inefficient.1 

On  two  of  the  most  important  schedules  in  the  tariff 
virtually  no  changes  at  all  were  made.  The  wool  and 
woollen  duties  were  left  intact,  except  for  a  reduction  in 
the  duty  on  wool  tops,  and  a  slight  reduction  on  yarns 
and  dress  goods.2  Of  these  minor  changes,  only  that  af- 

1  The  House  proposed  to  raise  the  duty  on  coal-tar  colors  from  30  to  35 
per  cent.,  but  in  the  act  it  was  finally  left  at  30  per  cent.     Mr.  Payne,  in 
advocating  the  House  rate,  was  compelled  to  admit:  "  I  am  sorry  to  have  to 
confess  it,  but  the  truth  is  that  the  chemists  in  Germany  beat  the  world.  .  .  . 
Some  enterprising  men  here  wanted  to  go  into  the  business.  .  .   .     But  the 
Germans  came  in  here  and  dumped  colors  in  the  market,  and  as  often  as  our 
people  succeeded  in  making  the  color  and  putting  it  on  the  market,  the 
Germans  came  in  and  sold  cheaper  colors,  or  an  equal  color  at  a  less  price." 

2  The  ad  valorem  duty  on  the  cheaper  grade  of  yarns  was  reduced  from 
40%  to  35$,  and  the  ad  valorem  duties  on  cotton-warp  dress  goods  were  also 
lowered  by  5  per  cent.      The  specific  duties  on  these  articles  remained 
unchanged.     The  reductions  bore  in  both  cases  on  grades  of  goods  not 


394  HISTORY  OF  THE  EXISTING   TARIFF. 

fecting  tops  caused  discussion.  Wool  tops  are  fibre  in  a 
stage  toward  yarn,  intermediate  between  combing  and 
spinning.  They  had  been  subjected  to  very  high  duties 
in  previous  acts  under  an  omnibus  clause  (as  wool  "  partly 
advanced  in  manufacture  "),  and  attention  had  been  di- 
rected to  them  by  some  published  correspondence  of  1897 
between  Mr.  Whitman,  the  President  of  the  Wool  Manu- 
facturers' Association,  and  the  then  Secretary  of  the  Asso- 
ciation, Mr.  North.1  Mr.  Whitman,  who  was  the  head  of 
the  one  great  mill  making  tops  for  other  spinners,  desired 
in  1897  the  retention  of  the  duty  on  this  product  as  well 
as  the  increase  of  duties  on  other  products  of  the  mill. 
He  was  aided  in  securing  them  by  the  fact  that  the  Asso- 
ciation Secretary,  Mr.  North,  served  also  as  confidential 
clerk  of  the  Senate  Finance  Committee.  The  whole  situ- 
ation was  one  too  familiar  in  our  tariff  history  :  the  details 
of  legislation  had  been  virtually  arranged  by  persons  having 
a  direct  pecuniary  interest  in  the  outcome,  and  having  also 
the  closest  relations  with  the  legislators  controlling  the 
outcome.  Even  though  there  was  no  corruption — and 
there  is  no  ground  for  suspecting  anything  more  than 
generous  contributions  to  party  chests — the  outcome  was 
much  the  same  as  if  there  had  been  corruption.  It  illus- 
trates once  more  how  radically  bad  was  the  method  by 
which  the  details  of  our  tariff  legislation  were  settled. 

imported  because  the  duties  had  been  prohibitory  ;  the  changes  signified 
nothing.  On  tops,  which  had  before  come  in  under  a  high  drag-net  rate, 
a  considerable  reduction  was  made  both  in  the  specific  and  ad  valorem  duties; 
but  the  rate  still  remained  high  enough  to  be  prohibitory. 

1  This  correspondence  can  be  found  in  the  Hearings  before  the  Committee 
on  Ways  and  Means,  vol.  v.,  p.  5492. 


THE    TARIFF  ACT  OF  1909.  395 

No  one  ventured  a  word  in  criticism  of  the  principle  of 
a  duty  on  raw  wool.  Some  woollen  manufacturers  asked 
for  a  change  in  the  method  of  assessing  it,  advocating  an 
ad  valorem  duty,  or  one  based  on  the  varying  shrinkage 
of  the  wool.  They  made  out  a  strong  case  in  favor  of 
such  a  change.  But  the  leading  spirits  in  Congress  were 
afraid  to  touch  the  complicated  wool  and  woollens  schedule. 
The  duties  on  wool  had  enormous  political  strength.  They 
were  supposed  to  give  the  farmer  a  share  of  the  benefits 
of  protection,  though  in  fact  the  beneficiaries  were  the 
ranchers  of  the  Far  West.  To  tamper  with  them  would 
have  endangered  the  allegiance  to  the  wonder-working 
protective  system  in  a  section  always  disposed  to  be  res- 
tive under  it.  So  the  duties  on  wool,  and  with  them  the 
huge  structure  of  compensating  and  protecting  duties  on 
woollens,  remained  untouched. 

Similarly  the  duties  on  sugar  were  left  virtually  un- 
touched. A  slight  concession  was  made  on  one  point  where, 
as  in  the  case  of  tops,  unfavorable  comment  happened  to 
be  made  at  the  time  of  the  tariff  debate.  That  point  was 
the  "differential,"  or  extra  duty  on  refined  sugar,  which 
operates  as  protection  to  the  sugar  refiners.  Here  there 
was  a  reduction  from  I2j  cents  per  hundred  pounds  to 
7i  cents  per  hundred  pounds.  The  American  Sugar  Re- 
fining Company,  or  "  trust,"  happened  to  be  in  the  public 
eye  for  other  reasons,  and  this  change  in  duty  was  among 
the  consequences.  As  the  situation  stood  in  1909,  it  was 
of  no  effect.  The  trust  was  in  a  less  commanding  position 
than  it  had  been  in  previous  years,  and  competition  had 


396  HISTORY  OF   THE  EXISTING   TARIFF. 

cut  down  the  margin  between  the  price  of  raw  sugar  and 
refined.  The  differential  of  7J  cents  per  hundred  weight 
now  quite  satisfied  the  refiners.  Moreover,  new  managers 
had  assumed  control  of  the  trust,  and  nothing  was  heard 
of  any  attempt  at  influence  on  legislation. 

The  duty  on  raw  sugar — by  far  the  most  important  part 
of  the  sugar  schedule — remained  in  every  detail  as  it  had 
been  fixed  in  1 897.'  Here  the  champions  of  the  farmers 
were  once  more  in  evidence.  The  domestic  production 
of  beet-sugar  had  made  great  strides  since  1897,  and  had 
become  important  among  the  sources  of  supply.  Most  of 
this  beet-sugar  came  from  the  arid  and  semi-arid  States, 
like  Colorado,  Utah,  California ;  but,  among  the  strictly 
agricultural  States,  Michigan  also  was  a  considerable  pro- 
ducer. The  domestic  beet-sugar  growers  were  the  vehe- 
ment opponents  of  any  reduction  in  the  rate  of  duty,  and 
made  much  of  high  cost  of  production,  as  regards  beets 
for  the  farmers  and  sugar  for  the  manufacturers.  The 
truth  seemed  to  be  that  in  a  State  like  Michigan  beet- 
sugar  making  could  not  be  carried  on  without  a  tariff 
prop ;  while  farther  west,  especially  in  a  State  like  Colo- 
rado, it  needed  none.  The  Michigan  sugar  people  had 
embarked  in  the  business  under  the  direct  encouragement 
of  the  government.  The  Department  of  Agriculture  had 
been  preaching  beet-sugar,  in  season  and  out  of  season, 
for  appropriate  regions  and  for  inappropriate :  not  unnatur- 
ally the  growers  were  almost  ferocious  in  their  opposition 
to  the  proposal  for  reducing  the  duty  on  sugar.  In  face 

1  See  pp.  349-350  for  a  statement  of  the  duty  of  1897. 


THE  TARIFF  ACT  OF  1909.  397 

of  their   opposition,  things   were  left  in   statu   guo. 

One  change  of  some  importance  was  made  in  the  sugar 
schedule.  It  was  provided  that  raw  sugar,  not  exceeding 
300,000  tons,  should  be  admitted  fre'e  of  duty  from  the 
Philippine  Islands.  The  imports  from  the  islands  had 
never  reached  this  amount ;  the  limitation  was  due  to  a 
fear  on  the  part  of  the  domestic  sugar  producers  that  there 
might  be  at  some  future  time  much  greater  imports.  For 
the  time  being,  the  proviso  meant  that  all  Philippine  sugar 
was  to  come  in  free.  Some  such  concession  to  this  de- 
pendency had  long  been  urged  by  President  Taft.  The 
feeling  in  favor  of  it  rested  in  good  part  on  a  confused 
notion,  fostered  by  much  of  the  ultra-protectionist  talk, 
that  a  duty  brings  a  burden  on  the  foreign  producer,  not 
on  the  domestic  consumer.  It  was  urged  that  we  should 
not  treat  the  Philippine  producers  as  foreigners,  by  main- 
taining what  was  supposed  to  be  a  burden  on  them.  In 
fact,  the  concession  meant  not  that  a  burden  was  removed, 
but  that  a  virtual  subsidy  was  granted. 

The  duty  on  sugar,  which  until  1890,  and  indeed  until 
1897,  had  been  chiefly  a  revenue  duty,1  had  become  a  pro- 
tective duty  of  wide  effect,  and  in  some  ways  of  unusual 
effect. 

iSee  the  discussion  of  it  from  this  point  of  view,  p.  305.  The  beet-sugar 
question  is  an  interesting  and  important  one,  closely  connected  with  ques- 
tions of  agricultural  development.  See  articles  by  H.  C.  Taylor  in  the 
Annals  of  the  American  Academy  of  Social  and  Political  Science ',  vol.  xxii. 
(1903),  p.  179,  and  by  G.  W.  Shaw  in  the  Journal  of  Political  Economy, 
June,  1903,  p.  334;  also  an  article  of  my  own  in  the  Quarterly  Journal  of  Eco- 
nomics, November,  1911  ;  and  R.  G.  Blakey's  monograph  The  United  States 
Beet- Sugar  Industry  and  the  Tariff  (1912).  (Note  continued  on  p.  398.) 


398  HISTORY  OF   THE    EXISTING   TARIFF. 

As  has  already  been  said  with  regard  to  the  remission 
of  duty  on  Hawaiian  sugar,1  a  partial  remission  redounds 
to  the  advantage  of  the  favored  producer,  not  of  the 
domestic  consumer.  Ordinarily  a  duty  brings  a  burden 
on  the  domestic  consumer,  and  its  remission  therefore 
ordinarily  brings  relief  to  him.  But  a  partial  remission 
means  a  loss  of  revenue  for  the  Treasury,  no  relief  for  the 
consumer,  and  a  virtual  bounty  to  the  exempted  producer. 
This  consequence  had  not  been  unforeseen  when  the 
Hawaiian  treaty  was  made,  in  1876;  but  it  had  been  sup- 
posed that  but  a  small  amount  of  sugar  would  be  produced 
in  the  islands.  In  fact,  the  product,  under  the  stimulus 
of  the  bounty,  increased  by  leaps  and  bounds  and  became 
an  important  part  of  our  total  supply.  This  sort  of  favor- 
itism, already  important  as  to  Hawaii,  was  made  perma- 
nent after  the  Spanish  War  and  was  greatly  extended. 
The  Hawaiian  remission,  which  formerly  rested  on  the 
treaty  with  the  islands,  became  definitive  after  their  an- 
nexation to  the  United  States  in  1898.  Imports  from 
Porto  Rico,  of  which  sugar  was  the  most  important,  were 
made  free  of  duty  in  1901.  The  same  treatment  was  now 
extended  by  the  tariff  act  of  1909  to  Philippine  sugar. 
It  is  only  a  matter  of  phraseology  whether  we  say  that 
the  protective  system  was  extended  by  this  process  to 
Hawaii,  Porto  Rico,  and  the  Philippines,  or  that  a 
bounty  was  given  to  the  producers  in  these  regions.  The 

The  American  Sugar  Refining  Co.  (the  trust)  had  made  large  purchases 
of  stock  in  the  various  beet-sugar  factories,  and  hence  was  quite  content 
that  the  duty  on  raw  sugar  should  stand. 

i  See  p.  279. 


THE   TARIFF  ACT  OF  1909.  399 

substantial  fact  was  that  the  American  consumer  continued 
to  pay  the  full  tax  on  sugar,  in  the  form  of  a  higher 
price,  and  that  the  benefit  of  the  remission  went  to  the 
various  favored  producers. 

With  those  various  remissions,  and  the  growth  of  the 
domestic  beet-sugar  industry,  the  sugar  duty  came  to  be 
distinctly  a  protective  duty.  In  1890,  it  had  been  still  in 
the  main  a  revenue  duty.  By  1909,  only  one  half  of  the 
sugar  consumed  continued  to  be  dutiable,  the  other  half 
being  free  of  tax ;  but  the  price  of  the  whole  was  raised 
by  the  full  amount  of  the  tax.  Such  is  the  characteristic 
situation  with  a  protective  duty. 

Still  another  complication  in  the  sugar  situation  arose 
from  the  treaty  of  1903  with  Cuba,  by  which  Cuban  sugar 
was  admitted  at  a  reduced  duty, — at  twenty  per  cent,  off, 
or  four-fifths  of  the  full  duty.  That  arrangement,  as  well 
as  the  rate  of  the  duty,  was  left  unchanged  by  the  tariff 
act  of  1909.  So  long  as  other  foreign  countries  sent  in 
sugar,  and  paid  the  whole  duty  on  it,  the  price  of  the  total 
supply  was  raised  by  that  full  amount.  Cuban  sugar  pro- 
ducers then  got  the  benefit  of  the  twenty  per  cent,  off, 
precisely  as  those  in  Porto  Rico  and  Hawaii  got  the  benefit 
of  entire  remission.  Until  1909,  it  may  be  remarked,  the 
Philippine  sugar  producers  had  been  in  the  same  situa- 
tion as  the  Cubans ;  their  product  till  then  had  come  in 
with  twenty-five  per  cent,  off,  or  at  three-fourths  of  the 
full  duty.  The  Cuban  sugar  crop  had  been  for  many 
years  the  largest  single  item  in  the  sugar  supply  of  the 
United  States.  With  a  favoring  climate,  ready  access  to 


400 


HISTORY  OF  THE  EXISTING  TARIFF. 


market,  the  stimulus  of  lowered  duty,  and  peaceful  con- 
ditions in  the  island,  it  grew  rapidly.  Foreign  full-duty 
sugar  had  been  almost  crowded  out  by  the  time  of  the 
passage  of  the  act  of  1909,  and,  barring  accidents,  was 
likely  to  be  crowded  out  completely  before  many  years. 
When  this  stage  was  reached,  the  effective  duty  would  be 
that  on  Cuban  sugar, — four-fifths  of  the  full  rate.  The 
special  advantages  to  Cuban  sugar  would  then  disappear 
and  the  bounty  or  protection  to  the  various  favored  pro- 
ducers— in  Hawaii,  Porto  Rico,  Philippines,  Louisiana, 
the  beet-sugar  States — would  be  at  four-fifths  of  the 
nominal  tariff  rate.1 

To  return  now  to  the  provisions  of  the  act  of  1909. 
Here,  as  in  previous  tariffs,  there  were  so-called  "jokers," 
— obscure  changes,  working  to  the  advantage  of  particu- 
lar individuals,  and  concealed  amid  the  endless  details. 

1  For  a  more  detailed  discussion  of  this  aspect  of  the  sugar  question, 
I  refer  the  reader  to  my  article,  on  "  Sugar  :  A  Lesson  on  Reciprocity  and 
the  Tariff,"  in  the  Atlantic  Monthly,  March.  1908,  and  to  a  supplementary 
note  in  the  Quarterly  Journal  of  Economics,  May,  1909. 

The  great  changes  which  took  place  between  1890  and  1908  in  the  sources 
of  sugar  supply,  and  consequently  in  the  effects  of  the  duty,  are  shown  by 
the  following  figures : 

SUGAR  SUPPLY  AND  REVENUE  FROM  SUGAR  DUTY,  1890  AND  1908 
Fiscal  Year,  1889-90 


Supply 

(million  lt>s.) 

Revenue  (million  dollars) 

Free  of  tax: 

Beet                 .8 

M 

652 

y  p  y    & 

(For  the  figures  of  1008,  see  p.  401,  note.) 


THE    TARIFF  ACT  OF  1909. 


401 


The  process  is  a  familiar  one,  A  constituent,  or  friend, 
or  contributor  to  the  party  campaign  expenses,  gets  the 
ear  of  an  influential  Congressman  or  Senator,  and  proposes 
an  increase  in  the  duty  on  an  article  which  he  produces 
or  wishes  to  produce.  If  his  sponsor  is  high  in  the  party 
councils — above  all,  if  a  member  of  the  House  Committee 
on  Ways  and  Means  or  the  Senate  Committee  on  Finance, 
— the  log-rolling  method  almost  ensures  enactment  of  the 
increased  duty.  Where  such  changes  concern  important 
articles,  like  cottons,  woollens,  silks,  hosiery,  there  is 
usually  some  public  discussion  and  at  least  pro  forma 
justification.  But  where  minor  articles  are  to  be  affected, 

Fiscal  Year,  igcrj-o8 


Supply  (million  Ibs.) 


Free  of  tax : 

Domestic  Cane.  ...<....    773 

Domestic  Beet 927 

Hawaiian i>o?8 

Porto  Rico 469 

Total  free  of  tax 

Taxed  at  reduced  rate : 

Philippine  (75%  of  full 

duty) 29 

Cuban  (80%  of  full  duty)  2,462 


Total  at  reduced  tax 
Paying  full  duty 


Total  supply. 


2,  491 
i  ,045 


6,783 


Re-venue  (million  dollars) 


•3 
323 


32.5 
17-4 


Total  revenue. 


49-9 


It  will  be  seen  that  in  1890  one-sixth  only  of  the  sugar  was  free  and  five- 
sixths  paid  the  full  duty.  In  1908,  on  the  other  hand,  one-half  the  sugar 
was  not  taxed  at  all,  one-third  paid  partial  duty,  one-sixth  only  paid  full 
duty.  Consequently,  though  the  consumption  was  doubled  by  1908,  the 
revenue  remained  (very  nearly)  the  same  as  m  1890.  Yet  the  consumers  in 
1908  paid  virtually  as  high  a  tax  per  pound  as  in  1890,  and  paid  twice  as 
much  in  the  aggregate ;  since  all  sugar,  whether  free,  or  partially  dutiable, 
or  dutiable  at  the  full  rate,  was  raised  in  price  by  the  amount  of  that  full 
rate. 


4O2  HISTORY  OF   THE    EXISTING    TARIFF. 

the  new  rates  are  quietly  put  through  without  check  or 
scrutiny.  In  the  act  of  1909,  this  was  particularly  the 
case  in  the  Senate,  since  the  Finance  Committee  of  that 
body  gave  no  public  hearings  and,  among  its  own  mem- 
bers, naturally  carried  senatorial  courtesy  to  the  limit. 
Thus  the  duty  on  some  nippers  and  pliers  was  quietly 
advanced,  for  the  benefit  of  a  single  manufacturer  in  New 
York, — in  this  case  under  the  sponsorship  of  the  Vice- 
President.  The  duty  on  cheap  cotton  gloves,  such  as  are 
used  by  policemen,  the  militia,  and  the  army  for  parade 
occasions,  was  virtually  doubled,  there  being  a  projector 
who  succeeded  in  getting  the  ear  of  a  New  England 
Senator.1  The  duty  on  horn  combs  was  raised  from  thirty 
to  fifty  per  cent.  The  duty  on  woven  fabrics  of  asbestos 
was  raised  in  similar  degree.  Although,  as  already  stated, 
the  duties  on  iron  and  steel  in  most  of  their  crude  forms 
were  reduced,  the  rate  on  structural  steel  was  advanced, 
by  the  quiet  insertion,  in  the  Senate,  of  a  clause  whose 
effect  was  not  at  all  apparent  on  first  inspection.2  Every 

1  This  duty  (paragraph  328  in  the  tariff  schedule  of  1909)  was  a  typical 
case  of  the  "joker."  The  previous  rate  had  been  fifty  per  cent.  The  new 
rate  was,  when  valued  under  $6.00  per  dozen,  50  cents  per  dozen,  plus  40  per 
cent.;  valued  over  $6.00  per  dozen,  50  per  cent.  This  did  not  seem  on  the 
face  of  it  a  marked  increase.  But  the  gloves  which  it  was  designed  to  reach 
were  the  cheap  sort,  worth  abroad  about  $1.00  per  dozen;  on  these  the  duty 
was  practically  doubled.  The  device  was  familiar  in  the  tariff  legislation  of 
the  period  ;  compare  p.  269,  above.  See  also  p.  443,  below. 

8  Paragraph  121  of  the  act  reads  thus  :  "  Beams,  girders,  .  .  .  together 
with  all  other  structural  shapes  of  iron  or  steel,  not  assembled  or  manufac- 
tured^ or  advanced  beyond  hammering,  rolling,  or  casting,  valued  at  ^  cent 
per  pound  or  less,  [duty]  T%  cent  per  pound  ;  valued  above  ^  cent  per 
pound,  -j*ff  cent  per  pound."  The  duty  in  1897  had  been  /^cent  per  pound; 
hence  there  was  apparently  a  decrease  in  duty.  But  the  language  of  this 


THE    TARIFF  ACT  OF  1909.  403 

one  conversant  with  our  tariff  history  knows  that  such 
items  have  been  too  common.  But  it  was  hardly  to  be 
expected  that  they  should  appear  in  a  tariff  act  supposed 
to  be  in  fulfilment  of  a  pledge  for  downward  revision. 

A  new  set  of  provisions  appeared  in  the  maximum  and 
minimum  arrangement.  They  were  very  simple.  The 
stated  tariff  rates  were  declared  to  constitute  the  minimum 
tariff  of  the  United  States.  To  these  rates  25  per  cent,  was 
to  be  added, — 25  per  cent,  not  of  the  rates,  but  25  per  cent, 
of  the  value  of  the  articles  imported, — on  goods  coming 
from  countries  which  "  unduly  discriminate  "  against  the 
United  States.  This  undue  discrimination  might  be  either 
"  in  the  way  of  tariff  rates  or  provisions,  trade  or  other 
regulations,  charges,  exactions,  or  in  any  other  manner," 
or  by  export  bounty  or  export  duty1  or  prohibition  upon 

paragraph  (otherwise  identical  with  that  of  the  corresponding  paragraph  of 
1897)  was  amended  by  the  insertion  of  the  words  in  italics.  There  was  no 
mention,  in  any  other  part  of  the  act,  of  structural  steel  that  is  "  assembled 
or  manufactured  or  advanced"  ;  hence  this  became  dutiable,  under  the 
dragnet  clause,  as  a  manufacture  of  iron  and  steel  not  specially  provided 
for, — namely,  at  45%  ad  valorem.  This  meant  a  marked  increase. 

Like  other  sorts  of  iron  and  steel,  structural  steel  was  not  likely  to  be  im- 
ported in  ordinary  times.  But  on  an  unusual  press  of  demand,  there  had 
been  imports  in  New  York  and  at  other  places  easily  reached  by  ocean 
steamers.  There  was  evidence  of  an  international  compact,  as  to  steel  rails, 
structural  steel,  and  other  products,  for  dividing  the  field  between  the 
American  steel  makers  (primarily  the  Steel  Corporation)  and  their  foreign 
rivals,  especially  the  German  Stahlwerksverband.  The  increased  duty  on 
structural  steel  clinched  the  compact  as  to  that  article,  by  keeping  the 
foreigners  out  of  the  American  market. 

I  have  given  some  details  regarding  these  "  jokers,"  in  an  article,  "  How 
Tariffs  should  not  be  made,"  American  Economic  Review,  March,  1911. 

1  The  provision  in  regard  to  export  duties,  by  which  they  might  become 
the  ground  for  levying  the  maximum  tariff,  was  neither  in  the  House  bill 
nor  in  the  Senate  bill.  "The  words  'or  imposes  no  export  duty'  were 


404  HISTORY  OF   THE    EXISTING   TARIFF. 

export.  The  minimum  tariff  plus  this  25  per  cent,  con- 
stituted the  maximum  tariff.  After  March  31,  1910,  the 
maximum  tariff  was  to  be  applied  unless  the  President 
had  been  satisfied  that  there  was  "  no  undue  discrimi- 
nation "  against  the  United  States.  If  so  satisfied,  he 
might  by  proclamation  admit  goods  from  a  given  country 
at  the  minimum  tariff  rates.  The  administration  of  the 
maximum  and  minimum  system  was  thus  put  entirely  in 
the  hands  of  the  President. 

Fortunately,  every  endeavor  was  made  by  President 
Taft,  and  in  the  end  with  success,  to  prevent  an  applica- 
tion of  the  maximum  tariff.  By  April  i,  1910,  he  was 
able  to  declare  himself  satisfied  that  there  was  no  "  undue  " 
discrimination  against  the  United  States  by  any  country 
whatever,  and  the  "  minimum  "  rates,  that  is,  the  tariff 
duties  really  meant  to  be  in  force,  were  universally  ap- 
plied. Negotiations  with  Germany  and  France  led  to  some 
relaxations  of  their  duties  and  regulations  as  to  American 
products ;  and,  in  true  mercantilist  spirit,  these  were  held 
forth  as  great  gains  to  American  industry,  and  inferentially 
as  causes  of  detriment  to  the  foreign  countries  concerned. 
Negotiations  with  Canada  led  to  but  the  slightest  con- 
cessions. That  country  refused,  as  already  stated,1  to 
modify  her  regulations  as  to  wood  pulp,  or  to  make  any 

inserted  in  conference,  and  I  believe  were  inserted  at  the  suggestion  of  a 
few  paper  manufacturers  in  order  to  impose  the  maximum  tariff  on  paper 
coming  from  the  Province  of  Quebec."  Mr.  Mann,  Congr.  Record,  p.  4732. 
I  do  not  know  what  grounds  there  may  be  for  this  suspicion.  Compare  note 
to  p.  382,  note,  above. 
1  See  p.  382. 


THE    TARIFF  ACT  OF  1909.  405 

changes  of  moment  in  her  general  tariff  system.  Some 
minor  changes  were  secured,  which  enabled  the  Adminis- 
tration to  make  a  respectable  show  of  having  gained  some- 
thing in  the  way  of  lower  duties ;  and  a  tariff  war,  which 
at  one  time  seemed  probable,  was  averted.  In  view  of 
the  unmistakably  critical  temper  of  the  country  as  to  the 
general  Republican  policy  and  not  least  as  to  the  tariff, 
it  would  have  been  politically  almost  suicidal  to  increase 
duties  against  any  important  country  by  the  25%  rate  of 
the  maximum  tariff.  Add  to  this  the  sincere  wish  of 
President  Taft  and  his  associates  to  prevent  any  such 
increase,  and  the  application  of  the  minimum  rates  was 
almost  a  foregone  conclusion. 

The  section  providing  for  the  maximum  and  minimum 
arrangement  contained  at  the  end  a  curious  clause,1  which 
seemed,  strictly  construed,  to  relate  solely  to  that  arrange- 
ment, but  has  been  construed  to  have  a  wider  bearing. 
During  the  session  there  was  talk,  especially  among  the 
advocates  of  downward  revision,  of  the  desirability  of  a 
Tariff  Commission.  Some  persons  went  so  far  as  to  sug- 
gest a  Commission  which  should  be  entrusted  by  Congress 
with  the  power  of  fixing  the  tariff  rates,  and  readjusting 
them  from  time  to  time  "according  to  conditions";  a 
scheme  obviously  impracticable.  But  there  was  much  to 
be  said  in  favor  of  creating  a  body  with  powers  of  inves- 
tigation. Hearings  before  Congressional  Committees,  as 

i  It  read  thus :  "To  secure  information  to  assist  the  President  in  the 
discharge  of  the  duties  imposed  upon  him  by  this  section,  and  the  officers 
of  the  government  in  the  administration  of  the  customs  laws,  the  President 
is  hereby  authorized  to  employ  such  persons  as  may  be  required." 


406  HISTORY  OF   THE  EXISTING    TARIFF. 

has  been  said,1  are  most  unsatisfactory  sources  of  infor- 
mation. And  there  is  need  of  information.  The  endeavor 
to  apply  the  "  true  principle  "  (of  equalizing  costs  of  pro- 
duction), while  far  from  being  a  solution  of  the  real  prob- 
lems underlying  the  tariff  controversy,  is  of  importance 
in  reference  to  vested  interests  and  the  disturbance  of 
existing  adjustments.  It  is  important,  too,  toward  ascer- 
taining how  far  monopolies  are  getting  excessive  profits 
under  the  shelter  of  "  unduly  "  high  duties.  On  all  such 
topics  sifted  and  accurate  information  is  called  for.  A 
permanent  body  of  competent  persons  can  do  much  toward 
clarifying  public  opinion  and  promoting  careful  legis- 
lation. The  proposal  for  a  tariff  board  having  functions 
of  this  sort  was  welcome  to  the  Administration,  but  very 
unwelcome  to  the  extreme  protectionists.  The  clause 
inserted  in  the  maximum  and  minimum  section  was  one 
of  those  ambiguous  compromises,  so  common  in  our  legis- 
lation, whose  outcome  depends  on  the  spirit  in  which 
they  are  construed.  Its  language  seemed  to  refer  only  to 
the  matter  of  foreign  discrimination.  But  the  board  ap- 
pointed under  this  authority  was  directed,  while  giving 
attention  first  of  all  to  the  administration  of  the  maximum 
and  minimum  rates,  to  gather  information  on  the  tariff 
generally,  with  reference  to  the  domestic  situation  as  well 
as  the  foreign.  The  declared  policy  of  the  Administration 
was  to  use  the  board  as  a  sort  of  Tariff  Commission :  an 
indication  that  the  act  of  1909  was  not  regarded  in  this 

1  See  p.  369  . 


THE    TARIFF  ACT  OF  1909.  407 

quarter,  as  it  was  among  the  extreme  protectionists,  as 
"settling"  the  tariff  question.1 

The  reciprocity  arrangements  provided  for  by  the  act 
of  1897  disappeared  entirely.  The  sections  relating  to 
reciprocity  in  that  act  were  expressly  repealed,  and  the 
President  was  given  authority  to  terminate  all  agreements 
made  under  them.  As  these  reciprocity  agreements  never 
had  been  of  any  substantial  importance,  their  repeal  was 
of  little  significance,  except  as  indicative  of  the  disappear- 
ance of  any  intention  to  deal  with  tariff  questions  in  this 
way. 

In  sum,  the  act  of  1909  brought  no  essential  change 
in  our  tariff  system.  It  still  left  an  extremely  high 
scheme  of  rates,  and  still  showed  an  extremely  intolerant 
attitude  on  foreign  trade.  The  one  change  of  appreciable 
importance  was  the  abolition  of  the  duty  on  hides.  As  an 
offset  to  this  were  the  increased  duties  on  cottons  and  silks, 
and  on  a  number  of  minor  articles.  Most  disappointing 
was  the  mode  in  which  the  subject  was  dealt  with.  There 
was  the  same  pressure  from  persons  engaged  in  industries 
subject  to  foreign  competition,  the  same  willingness  to 
accede  to  their  demands  without  critical  scanning.  In 
the  House,  under  the  leadership  of  Mr.  Payne,  there  was 
an  endeavor  both  to  maintain  publicity  and  to  prevent 
such  concealed  items.  In  the  Senate,  things  went  in  star- 

1  President  Taft's  declaration  in  regard  to  the  tariff  board  was  made  in  his 
speech  at  Winona,  Minn.,  in  October,  1909.  Professor  H.  C.  Emery  was 
made  chairman  of  the  board.  The  urgency  appropriation  act  of  1909  ap- 
propriated money  for  its  expenses,  for  one  year  only.  A  further  and  enlarged 
appropriation  (of  $250,000  a  year)  was  secured  for  its  work  in  1910. 


408  HISTORY  OF   THE  EXISTING   TARIFF. 

chamber  fashion,  and  the  familiar  process  of  log-rolling 
and  manipulation  was  once  again  to  be  seen.  The  act  as 
finally  passed  brought  no  real  breach  in  the  tariff  wall,  and 
no  downward  revision  of  any  serious  consequence. 

None  the  less,  a  somewhat  different  spirit  from  that  of 
1890  or  of  1897  was  shown  in  1909.  Though  the  act  as  a 
whole  brought  no  considerable  downward  revision,  it  was 
less  aggressively  protectionist  than  the  previous  Repub- 
lican measures.  The  increases  of  duty  were  more  furtive, 
the  reductions  were  more  loudly  proclaimed.  The  extreme 
advocates  of  protection  were  on  the  defensive.  There 
was  unmistakable  evidence  in  Congress  and  in  the  com- 
munity of  opposition  to  a  further  upward  movement. 
High-water  mark  apparently  had  been  reached,  and  there 
was  reason  to  expect  that  the  tide,  no  longer  moving 
upward,  might  thereafter  begin  to  recede. 


CHAPTER  IX. 

THE  TARIFF  ACT  OF   1913. 

THE  closing  sentences  of  the  preceding  chapter  were 
written  in  1910,  in  the  edition  of  this  book  which  was 
published  shortly  after  the  passage  of  the  tariff  act  of  1909. 
The  course  of  events  soon  confirmed  the  forecast  then  made. 
In  the  Congressional  elections  of  the  autumn  of  1910  the 
Republicans  suffered  a  defeat  as  decisive,  even  though  not 
quite  so  overwhelming,  as  that  which  twenty  years  earlier 
had  followed  the  passage  of  the  McKinley  tariff  act  of  1890. 
At  both  elections,  in  1910  as  well  as  in  1890,  there  was 
virtually  no  other  question  than  the  tariff  on  which  the 
parties  differed ;  and  it  would  seem  to  have  been  shown 
once  more  that  when  this  issue  presented  itself  without 
complication  from  others,  the  popular  verdict  was  against 
the  stubborn  maintenance  of  a  rigid  protective  policy. 

Beyond  question,  the  industrial  conditions  of  the 
moment  contributed  also  to  the  Republican  defeat.  De- 
pression had  followed  the  crisis  of  1907,  and  had  continued 
after  the  passage  of  the  tariff  of  1909.  During  the  ex- 
traordinary decade  of  activity  and  prosperity  which  fol- 
lowed the  tariff  of  1897(00  doubt  a  deceptive  prosperity, 

in  part  seeming  as  much  as  real),  the  Republicans  had 

409 


4io 


HISTORY  OF  THE  EXISTING  TARIFF. 


vaunted  theirs  as  the  party  of  good  times,  and  had  ascribed 
all  the  country's  blessings  to  the  wonder-working  policy 
of  protection.  It  was  inevitable  that,  when  collapse  and 
depression  came,  the  Republicans  should  in  turn  be  held 
responsible,  since  they  had  assumed  the  credit  for  all  pre- 
ceding converse  experiences.  They  were  hoist  by  their 
own  petard. 

The  particular  form  commonly  taken  by  the  indictments 
against  the  Republicans  for  bad  times  was  that  of  holding 
them  and  their  tariff  policy  responsible  for  the  rise  in  the 
cost  of  living.  On  this  question,  as  on  the  connection 
between  tariffs  and  prosperity,  a  sensible  person  trained  in 
economics  would  have  to  make  his  reservations.  The  rise  in 
prices  during  the  opening  decade  of  the  century  was  world 
wide.  Its  main  cause,  in  the  judgment  of  almost  all  the 
economists,  was  the  immense  increase  in  the  output  and 
supply  of  gold.  The  tariff  doubtless  kept  the  prices  of  some 
commodities  higher  in  the  United  States  than  elsewhere ; 
but  they  had  been  kept  higher  under  the  duties  of  earlier 
periods  also, — by  the  tariffs  of  1890  and  1897.  It  was  not 
proved,  or  susceptible  of  proof,  that  the  tariff  was  the  cause 
of  the  continuing  rise  in  all  prices  throughout  these  years.1 

1  In  saying  this,  I  would  not  deny  the  theoretic  probability  that  a  system 
of  protection  will  bring  about  a  rise  in  general  prices  and  incomes  (a  fall  in 
the  value  of  money)  that  goes  on  for  some  time  after  its  inception.  But 
the  changes  made  by  the  tariff  of  1897  hardly  caused  any  such  disturbance  of 
international  trade  as  to  warrant  the  conclusion  that  the  course  of  prices 
was  sensibly  affected  by  this  factor.  On  the  general  reasoning,  see  J.  S. 
Mill's  Principles  of  Political  Economy,  book  v.,  ch.  iv.,  §6,  and  Taussig, 
Principles  of  Economics ',  book  iv.,  ch.  37,  §  I. 


THE  TARIFF  ACT  OF  I0IJ.  411 

The  particular  phase  of  rising  prices  which  most  aroused 
comment  and  bitterness  was  that  in  articles  of  food, 
especially  breadstuffs  and  meats^  For  this,  too,  the 
tariff  was  in  no  considerable  degree  responsible.  Special 
causes  were  at  work  to  raise  the  higher  prices  of  some 
necessaries:  in  part  temporary  crop  conditions,  and, 
probably  more  important,  the  permanent  force  of  steadily 
increasing  pressure  upon  land  that  was  no  longer  super- 
abundant. But,  just  as  the  Republicans  had  reasoned 
post  hoc  ergo  propter  when  they  ascribed  all  prosperity  to 
their  protective  tariff,  so  the  Democrats  now  reasoned 
with  at  least  equal  speciousness  when  they  ascribed  not 
only  depression  but  the  high  cost  of  living  to  that  same 
tariff.  For  many  years  luck  had  been  with  the  party  of 
protection.  The  luck  turned  after  1907,  and  it  was  natural, 
nay  inevitable,  that  their  opponents  should  take  all  tacti- 
cal advantages  of  the  new  turn  of  events. 

Much  the  same  is  to  be  said  of  the  relation  between 
the  tariff  and  monopolies.  As  has  already  been  remarked  ' 
the  combination  problem,  though  it  touches  the  tariff 
problem,  is  by  no  means  identical  with  it,  or  to  be  solved 
by  tariff  legislation.  But  the  feeling  was  strong  that 
trusts  had  been  aided  by  the  tariff,  if  not  created  by  it. 
That  they  had  been  aided  could  not  be  gainsaid.  The 
way  in  which  the  tariff  had  been  dealt  with  in  1909, — 
the  conspicuous  pressure  from  large  corporations  and  the 
spectacle  of  manipulation  of  rates  at  the  behest  of  domes- 

i  See  pp.  310,  316,  above. 


4I2  HISTORY  OF  THE  EXISTING  TARIFF. 

tic  producers, — strengthened  the  impression  that  the  "  in- 
terests "  looked  in  this  direction  for  support.  The  part 
played  by  protection  in  establishing  and  maintaining  the 
combinations  was  much  over-stated  ;  but  there  was  enough 
of  truth  in  the  charge  that  they  were  benefited  by  the 
tariff  to  make  this  also  an  effective  campaign  argument. 

Under  the  influence  of  these  different  causes,  the 
Republicans  went  down  to  defeat  in  the  Congressional 
elections  of  1910,  and  to  nothing  less  than  rout  in  the 
Presidential  election  of  1912.  No  doubt  their  collapse  in 
the  latter  year  was  due  largely  to  the  split  within  their 
own  ranks  which  ensued  after  the  candidacy  of  ex-Presi- 
dent Roosevelt  for  nomination  and  the  formation  of  the 
new  Progressive  party.  Yet  few  unbiased  observers  would 
have  questioned  that  even  without  this  defection  the 
Republicans  in  1910-12  had  little  prospect  of  victory. 
The  disaffection  with  the  party  and  its  leaders,  made 
clear  in  the  Congressional  elections  of  1910,  had  shown  no 
signs  of  abating.  The  day  of  the  Democrats  had  come.1 

1  The  strength  of  the  parties  in  Congress  was  as  follows  : 

6ist  Congress,  1909-1911  (that  which  passed  the  tariff  act  of  1909)  : 

House,  214  Republicans  Senate,  60  Republicans 

175  Democrats  32  Democrats 
62d  Congress  (1911-1913): 

House,  228  Democrats  Senate,  51  Republicans 

165  Republicans  43  Democrats 

I  Socialist 

&3d  Congress,  1913-1915  (that  which  passed  the  tariff  act  of  1913): 

House,  286  Democrats  Senate,  51  Democrats 

122  Republicans,  44  Republicans 

21  Progressives,    Progres-  I  Progressive 
sive  Republicans,  and 
Independents 


THE  TARIFF  ACT  OF  1913.  4*3 

During  the  sixty-second  Congress  (1911-13)  the  Demo- 
crats had  a  majority  in  the  House  only.  The  Senate  was 
still  controlled  by  the  Republicans^  Consequently  there 
was  much  pulling  and  hauling,  and  posing  for  electioneer- 
ing effect ;  but  no  legislation  on  the  tariff,  and  no  prospect 
of  any.  The  Democrats  in  the  House  passed  bills  which 
they  knew  the  Senate  would  not  entertain ;  the  Senate  made 
amendments  which  it  was  certain  the  House  would  reject. 
After  their  defeat  of  1910  the  Republicans  could  no  longer 
take  an  attitude  of  uncompromising  refusal  to  make  reduc- 
tions. But  they  maintained,  and  no  one  with  more  insis- 
tence than  President  Taft,  that  Congress  should  wait  until 
the  Tariff  Board  hadVeported;  thus  only  could  a  "scientific  " 
revision  be  accomplished.1  The  Democrats  in  the  House 
naturally  looked  on  this  contention  as  a  mere  pretext  for 
delay,  and  pushed  ahead  with  proposals  of  their  own.  They 
passed  bills  for  lowering  greatly  the  duties  on  cottons,  and 
on  wool  and  woollens;  and  they  passed  a  "farmers'  free 
list "  bill,  which  indicated  what  element  in  the  electorate 
they  were  determined  to  bid  for.  The  circumstance  that 
in  the  Senate  there  were  Republicans  with  Progressive 
leanings,  who  had  already  shown  in  1909  a  spirit  of  revolt 
on  the  tariff  question,2  caused  some  among  these  bills — 
on  wool  and  woollens,  and  on  iron  and  steel — to  run  the 
gauntlet  of  the  Senate:  patched  up  and  compromised 
measures,  in  reality  satisfactory  to  no  one.  But  as  all 

1  Compare  what  is  said  of  the  Tariff  Board  below,  p.  424. 

2  See  p.  376,  above. 


4H  HISTORY  OF  THE  EXISTING  TARIFF. 

hands  expected,  these  came  to  nothing,  being  either  vetoed 
by  President  Taft  or  lost  in  Conference  Committee.  The 
real  struggle,  it  was  felt,  would  come  in  the  next  ensuing 
election  ;  the  decision  must  be  in  the  hands  of  a  Congress 
in  which  one  party  or  the  other  had  control  throughout. 

To  this  general  do-nothing  attitude  there  was  one  ex- 
ception. President  Taft's  Administration  concluded  in 
1910  a  reciprocity  treaty  with  Canada  which  required  by 
its  terms  the  approval  of  both  houses  of  Congress.  The 
treaty  portended  no  serious  industrial  consequences.  It 
proposed  to  admit  free  of  duty  into  both  countries  cer- 
tain agricultural  products  and  a  few  raw  materials,  such 
as  wheat,  lumber,  wood-pulp.  It  was  bitterly  opposed  by 
the  extreme  protectionists ;  and  the  proposed  free  ad- 
mission of  wheat  and  the  like  products  was  once  again 
made  the  occasion  for  dangling  before  the  farmer  his  sup- 
posed concern  in  this  part  of  the  protective  system. 
Nevertheless,  the  bill  for  approving  the  treaty  was  carried 
not  only  in  the  House  but  in  the  Senate  also;  though  in  the 
latter  body  with  a  resulting  dissension  among  the  already 
divided  Republicans  that  foreshadowed  the  coming  split 
in  the  party.  But  after  having  been  carried  through 
in  the  United  States,  the  treaty,  to  every  one's  surprise, 
was  defeated  in  Canada.  The  Liberal  party  there,  which 
had  agreed  to  it  and  championed  it,  was  overthrown  by 
the  opposing  Conservatives  at  an  election  in  which  the 
treaty  was  the  sole  issue.  In  previous  years,  especially 
in  the  last  two  decades  of  the  nineteenth  century,  the 


THE  TARIFF  ACT  OF  1913-  415 

Canadians  had  been  more  than  willing  to  enter  into  closer 
trade  relations  with  the  United  states.  But  various  causes 
had  led  to  a  change  of  feeling :  not  only  the  repeated  and 
almost  insolent  rejection  of  their  overtures  by  our  unre- 
lenting protectionists,  and  the  consequent  adoption  of  a 
"  national  "  policy  of  their  own,  but  the  great  impetus  to 
prosperity  from  the  growth  of  the  Canadian  Northwest. 
Some  flighty  utterances  by  American  public  men,  during 
the  debates  on  this  side  the  border,  alluding  to  the  treaty 
as  a  step  toward  ultimate  annexation,  offended  the  grow- 
ing feelings  of  independence  and  pride,  which  at  best 
made  the  popularity  of  the  measure  uncertain.  At  all 
events,  defeated  the  treaty  was  in  Canada ;  and  thus  the 
one  tariff  measure  which  the  Taft  Administration  had 
made  its  own  and  had  carried  through  in  the  teeth  of 
angry  opposition  came  to  naught. 

The  63d  Congress  (1913-1915)  was  completely  con- 
trolled by  the  Democrats.  In  the  House  their  majority 
was  overwhelming  ;  and  even  in  the  slow-changing  Senate 
they  were  sure  of  control.  President  Wilson,  as  was  to  be 
expected,  called  an  extra  session  almost  immediately,  and 
the  tariff  was  at  once  taken  in  hand.  A  bill  for  gen- 
eral revision  had  already  been  elaborated  by  the  House 
Committee  of  Ways  and  Means  during  the  hold-over 
session  which  ended  in  March,  1913.  This  became  the 
basis  of  a  new  bill,  which  was  passed  promptly  by  the 
House  (May  8).  In  the  Senate  progress  was  slower ; 
there  were  wearisome  and  fruitless  debates  in  an  all-summer 


41 6  HISTORY  OF  THE  EXISTING  TARIFF. 

session ;  and  not  until  the  close  of  September  did  the 
Senate  pass  it.  The  act  became  a  law  October  3,  and 
went  into  effect  at  once.1 

Both  in  the  House  and  Senate  the  Democrats  showed 
remarkable  party  cohesion,  in  striking  contrast  with  the 
dissensions  of  the  distracted  Republicans,  and  in  equal 
contrast  with  the  dissensions  which  the  Democrats 
themselves  had  experienced  at  the  time  of  the  previous 
tariff- reduction  measure  (i894).2  Party  caucuses  of  the 
Democrats  voted  on  the  bills  as  prepared  by  the  House  and 
Senate  committees  ;  the  influence  of  tradition  and  leader- 
ship was  exerted,  with  success,  to  hold  the  party  mem- 
bers to  the  program  settled  by  the  majority  within  their 
own  ranks.  To  this  success  the  attitude  of  the  Adminis- 
tration contributed  most  effectively.  President  Wilson 
had  quietly  but  unhesitatingly  assumed  leadership,  and 
secured  a  hold  on  his  associates  and  followers  which 
astonished  friend  and  enemy.  Luck  was  again  with  the 
Democrats.  They  had  an  able  leader  in  the  House,  in 
Mr.  Underwood,  the  Chairman  of  the  Ways  and  Means 
Committee ;  they  had  a  brilliant  party  chief  in  the  Presi- 
dent. They  were  able  to  march  straight  to  their  goal. 

*It  was  provided,  however,  that  wool  should  not  become  free  of  duty 
until  Dec.  I,  1913;  that  the  reductions  on  woollens  should  not  take  effect 
until  Jan.  I,  1914  ;  and  that  the  first  change  on  sugar  (see  p.  425,  below) 
should  not  take  effect  until  March  i,  1914.  The  postponements  enabled 
importers  and  manufacturers  of  these  important  articles  to  adjust  themselves 
more  easily  to  the  new  conditions. 

2  Compare  pp.  286-288,  above. 


THE  TARIFF  ACT  OF  1913.  417 

Notwithstanding  this  steadiness  and  unity  of  action, 
the  tariff  act  still  showed  the  influence  of  our  cumbrous 
two-chamber  system.  The  Senate  made  many  amend- 
ments to  the  House  bill ;  and  at  the  last  moment  a  quantity 
of  details  had  to  be  settled  in  the  hurried  meetings  of  a 
Conference  Committee.1  It  is  to  be  said,  however,  that  the 
conflicting  amendments  and  eventual  compromises  gave 
little  evidence,  if  indeed  any  at  all,  of  the  sort  of  manipula- 
tion which  had  affected  the  details  of  the  tariff  acts  of 
1890,  1897,  and  1909.  Persons  interested  in  maintaining 
or  increasing  this  or  that  rate  of  duty  got  but  cold  com- 
fort. The  Senate  amendments  were  usually  in  the  direc- 
tion of  lowering  the  House  rates  ;  among  other  changes 
they  made  some  considerable  additions  to  the  free  list. 
If  there  were  "  jokers,"  they  were  the  result  not  of  design 
but  of  ignorance  or  inattention.  Errors  and  inconsisten- 
cies there  were.  Such  will  always  remain  as  long  as  there 
is  no  concentration  of  responsibility  for  the  details  of 

i  For  example,  the  bill  as  passed  by  the  House  provided  for  a  discount  of  5 
per  cent,  when  goods  were  imported  in  American  vessels.  The  question  was 
raised  whether  such  a  proviso  was  not  in  violation  of  commercial  treaties 
with  various  countries  ;  accordingly  the  Senate  struck  it  out.  In  the  Con- 
ference Committee  it  was  again  inserted,  but  with  an  additional  clause  that 
it  should  not  "  abrogate,  impair,  or  affect"  the  provisions  of  any  treaty. 
Just  what  the  provision  signified,  with  this  clause  added,  seems  not  to  have 
been  considered.  It  appeared  that  almost  all  countries,  and  especially  the 
great  carrying  countries  (Great  Britain,  Germany,  Holland)  had  treaties 
providing  against  discrimination  ;  and  the  Treasury  Department  ruled  that 
under  these  treaty  conditions  the  clause  was  inoperative.  At  this  writing 
(December,  1913)  it  is  still  an  open  question  how  it  will  be  construed  by 
the  courts. 
*7 


41 8  HISTORY  OF  THE  EXISTING  TARIFF. 

legislation;  and  there  can  be  no  concentration  so  long  as 
two  legislative  bodies  are  each  free  to  patch  every  measure. 

Some  aspects  of  the  debates  on  the  act,  and  some  ques- 
tions of  principle  raised  by  the  debates,  may  first  receive 
attention. 

The  new  principle  of  which  most  was  made  by  the  ad- 
vocates of  the  act  was  that  of  a  "  competitive  tariff."  In 
1909,  it  will  be  remembered,  the  Republicans  had  pro- 
fessed to  act  on  quite  a  different  principle, — that  of 
equalizing  cost  of  production.  These  two  were  set  forth 
by  both  sides  as  starting  from  opposite  poles  in  the  tariff 
controversy.  And  yet,  impartially  considered,  and  as- 
suming consistent  application,  they  would  seem  to  come 
to  very  much  the  same  thing.  The  notion  underlying 
equalization  of  cost  of  production  is  that  of  enabling 
the  domestic  producer  to  compete  on  even  terms  with  the 
foreign  producer.  This  would  seem  to  be  essentially 
the  notion  of  a  "  competitive  tariff."  It  is  true  that  in 
the  Republican  statements  of  the  principle  of  equalization, 
something  was  said  of  a  "  reasonable  profit  "  to  the  domestic 
producer ;  whereas  the  Democrats,  when  explaining  what 
was  meant  by  a  "  competitive  tariff,"  pooh-poohed  reason- 
able profits,  and  intimated  that  the  competition  should  be 
such  as  to  cut  down  domestic  profits,  and  perhaps  wipe 
out  some  of  them.  Yet  a  reasonable  profit  is  obviously 
to  be  considered  among  the  normal  expenses  of  produc- 
tion, even  though  it  be  not  so  reckoned  under  the  usual 
methods  of  cost  accounting.  A  '*  competitive  tariff  "  would 


THE  TARIFF  ACT  OF  1913.  419 

seem  to  be  one  under  which  domestic  and  foreign  pro- 
ducers can  compete  in  such  manner  that  both  should  get 
reasonable  profits.  Fairly  and  consistently  applied,  there- 
fore, the  principle  of  a  competitive  tariff  cannot  be  said 
to  differ  in  essentials  from  that  of  a  tariff  equalizing  cost 
of  production. 

In  discussing  the  tariff  act  of  1909,  I  have  already 
pointed  out  the  obvious  fact  that  universal  equalization 
of  cost  of  production  means  universal  application  of 
protection.1  The  principle  of  a  "  competitive  tariff  "  per- 
haps does  not  go  quite  so  far,  especially  if  applied  with  a 
less  generous  reckoning  of  the  domestic  producer's  ex- 
penses. None  the  less,  under  that  principle  also  duties 
should  be  made  high  on  commodities  produced  in  the 
United  States  under  disadvantageous  conditions,  and 
therefore  at  heavy  expense.  The  notion  of  the  "  competi- 
tive tariff  "  is  no  less  inconsistent  with  the  principle  of  free 
trade  than  is  the  rival  one.  Under  consistent  free  trade, 
the  competition  between  the  foreign  producer  and  the 
domestic  producer  would  not  be  a  weighted  one,  with 
handicaps  in  favor  of  the  domestic  producer ;  it  would  be 
quite  an  even  one.  The  principle  of  a  "  competitive 
tariff  "  would  seem  to  mean  merely  that  protection  should 
not  be  unnecessarily  high,  yet  high  enough  to  ensure  the 
maintenance  of  domestic  production. 

Another  phrase  much  used  in  the  debates  of  1913  was 
that  of  a  "  legitimate  "  industry.  No  legitimate  industry, 

1  See  p.  363,  above. 


420  HISTORY  OF  THE  EXISTING  TARIFF. 

it  was  said,  would  be  endangered.  What  is  an  illegiti- 
mate industry  ?  one  that  cannot  maintain  itself  without 
some  sort  of  legislative  prop?  or  one  that  has  lost  the 
right  to  a  prop  because  of  the  methods  by  which  its 
promoters  have  sought  to  influence  legislation  in  the 
past?  or  one  that  has  secured  unusual  profits  through 
monopoly  or  semi-monopoly?  Perhaps  the  phrase  refers 
to  industries  which  could  hold  their  own  under  a  com- 
paratively moderate  scale  of  duties,  but  rules  out  indus- 
tries depending  upon  a  range  of  duties  distinctly  high. 
Or  it  may  mean  that  vested  industries  should  not  be 
disturbed, — industries  established  on  the  supposition  that 
the  policy  of  protection,  maintained  for  so  many  years, 
would  be  continued  indefinitely.  Hardly  any  intimation 
was  given  that  an  industry  was  illegitimate  merely 
because  dependent  on  protection.  Neither  phrase — 
"  legitimate  "  industries  or  "  competitive  "  industries — was 
used  in  such  a  way  as  to  commit  its  advocates  either  to 
the  abolition  of  protection  or  to  a  consistent  application 
of  free  trade. 

All  such  catchwords,  however,  are  less  important  in 
their  strict  and  consistent  meaning  than  in  what  they 
imply  to  the  average  voter.  Their  implications  were  by 
no  means  the  same.  They  suggested  very  different  points 
of  view.  The  Republicans,  when  they  professed  to  be 
desirous  of  merely  equalizing  costs  of  production,  made 
it  clear  that  they  meant  duties  to  be  kept  amply  high 
enough  to  leave  the  domestic  producer  in  command  of 


THE  TARIFF  ACT  OF  1913.  421 

the  situation.  The  Democrats,  when  they  spoke  of 
competition,  meant  that  duties  should  be  kept  below  the 
point  of  prohibition.  The  Republicans  wished  to  make 
sure  of  keeping  imports  out ;  the  Democrats  wished  to 
make  sure  of  letting  some  in.  And  further,  the  Demo- 
crats, however  they  might  speak  of  competitive  rates  and 
legitimate  industries,  reserved  the  alternative,  where 
political  or  economic  expediency  prompted  it,  of  throw- 
ing these  principles  to  the  winds  and  of  fixing  duties 
quite  without  regard  to  competition  or  legitimacy. 

None  the  less,  there  was  occasional  discussion  that 
implied  the  essential  free  trade  reasoning.  "  Legitimate  " 
industries  were  sometimes  described  as  those  economically 
legitimate ;  that  is,  such  as  could  hold  their  own  without 
protection.  From  still  another  point  of  view  the  illegiti- 
macy of  protection  as  such  was  implied.  The  House 
leader,  Mr.  Underwood,  in  a  widely  circulated  speech,1 
presented  some  estimates  of  the  taxes  which  the  con- 
sumer paid  under  the  tariff,  and  reckoned  among  these  the 
amounts  paid  in  the  form  of  higher  prices  on  commodi- 
ties produced  at  home.  Calculations  of  this  kind  call  for 
the  greatest  caution.  There  were  but  few  commodities, — 
sugar  and  wool  might  be  instanced, — for  which  it  could 
be  figured  out  with  any  accuracy  how  great  was  the  rise 
in  price  which  the  duties  caused,  and  how  great  was  the 
total  burden  on  the  consumer  if  both  domestic  output 

iThe  speech  was  made  in  the  House,  April  23,  1913,  and  circulated  in 
pamphlet  form. 


422  HISTORY  OF  THE  EXISTING  TARIFF. 

and  imports  were  considered.  In  most  cases  figures  of 
this  sort  rest  on  guesswork.  Such,  for  example,  was  the 
case  with  calculations  of  the  total  burden  from  the  duties 
on  cottons,  silks,  woollens,  glassware,  manufactures  of 
iron.  This  much,  however,  is  to  be  said  :  one  who  parades 
such  figures  uses  the  essential  argument  for  free  trade. 
He  can  hardly  admit  the  stock  protectionist  pleas,  under 
which  it  is  not  admitted  for  a  moment  that  there  is  a  real 
tax  on  the  consumer,  still  less  a  net  loss  to  him,  because  of 
higher  prices  of  commodities  produced  within  the  country. 
One  who  argues  after  this  fashion  would  seem  not  to  be 
able  to  use  the  principle  of  a  "  competitive  tariff,"  which 
assumes  a  partition  of  the  market  between  the  domestic  pro- 
ducer and  the  foreign;  or  at  the  most  he  can  use  it  only  as 
a  sort  of  stop-gap,  a  rough-and-ready  expedient  for  keeping 
duties  within  the  bounds  set  by  regard  for  vested  interests. 
Perhaps  no  topic  brought  into  clearer  light  the  mode 
in  which  the  two  parties  approached  the  tariff  question 
than  that  of  the  expediency  of  maintaining  a  tariff  board. 
Unless  the  principle  of  free  trade  is  to  be  sweepingly  and 
consistently  applied,  there  is  ground  for  detailed  inquiry 
on  the  facts  of  each  particular  industry.  Under  free 
trade,  such  inquiry  is  superfluous.  All  that  needs  then 
to  be  done  is  to  treat  the  imported  and  domestic  supply 
on  the  same  terms :  either  tax  both  at  the  same  rate,  or 
free  both  from  taxes,  and  let  the  results  of  completely 
equal  competition  work  themselves  out.  But  this  drastic 
treatment  no  one  proposed,  at  least  for  immediate  general 


THE  TARIFF  ACT  OF  1913.  423 

application.  Now  if  the  basis  of  adjustment  was  to  be 
that  of  making  conditions  competitive,  or  that  of  equalizing 
cost,  or  that  of  regarding  most  established  industries  as 
legitimate, — on  any  such  basis  the  question  in  each  par- 
ticular case  must  arise,  what  precise  rate  of  duty  brings 
about  the  desired  adjustment?  Hence  the  Republicans 
had  much  to  say  about  the  need  of  an  expert  board  of 
investigators  and  the  recklessness  of  disturbing  the 
foundations  of  industry  without  painstaking  examination. 
That  the  Ways  and  Means  Committee  of  the  House,  or 
the  Finance  Committee  of  the  Senate,  was  not  in  position 
to  make  such  investigations  was  now  freely  admitted  by 
the  Republicans.  They  did  not  deny  their  own  sins  of  the 
past  in  this  regard,  but  urged  improvement  for  the  present 
and  the  future.  There  was  much  complaint  that  the  Dem- 
ocratic Ways  and  Means  Committee  had  proceeded  rough- 
shod, arrived  at  duties  by  guesswork,  and  fixed  rates  on 
materials  and  half-finished  commodities  that  were  inconsis- 
tent with  rates  upon  finished  or  nearly  finished  commodities. 
The  new  tariff,  it  was  said,  was  not  a  "  scientific  "  tariff. 

In  this  there  was  not  a  little  truth.  The  duties  were 
in  fact  settled  in  more  or  less  rough  and  ready  fashion. 
Doubtless  the  exact  rates  in  many  cases  were  the  results 
of  compromise,  not  of  any  close  calculation  or  accurate 
information.  Beyond  question  the  same  sort  of  thing  had 
gone  on  in  previous  years,  and  even  more  flagrantly. 
But  the  Republicans  could  maintain  that  since  1909  the 
Tariff  Board  had  been  at  work  and  had  shown  the  possi- 


424  HISTORY  OF  THE  EXISTING  TARIFF. 

bility  of  more  deliberate  and  discriminating  procedure.1 
And  yet  the  Democrats  could  not  be  seriously  expected 
to  pay  much  attention  to  this  demand  for  prolonged 
preparation  and  expert  examination.  In  the  first  place, 
the  Tariff  Board  was  a  Republican  device.  However  ex- 
cellent its  work, — and  no  competent  observer  would  deny 
that  it  had  thrown  much  needed  light  on  the  industries 
which  it  investigated, — a  flavor  of  partisanship  remained. 
The  very  fact  of  its  being  a  Republican  product  caused 
the  Democrats  to  turn  their  backs  on  it.  More  important, 
however,  was  the  circumstance  that  detailed  and  elabo- 
rate inquiry  necessarily  meant  delay.  The  Democrats 
were  not  to  be  blamed  for  believing  that,  however  un- 
biased the  members  of  the  Tariff  Board  might  have  been, 
and  however  excellent  their  work,  the  real  object  of  the 
Republican  leaders  who  championed  the  Board  was  to 
stave  off  early  action  and  perhaps  give  a  chance  for  the 
political  situation  once  more  to  take  a  turn  in  their  favor. 
Postponement  of  action  by  the  Democrats  until  the  re- 

i  The  Tariff  Board  (see  pp.  405-407)  made  three  reports  :  (i)  On  the 
Pulp  and  News-Print  Paper  Industry,  1911  ;  (2)  On  Wool  and  Manu- 
factures of  Wool,  4  volumes,  1912  ;  (3)  On  Cotton  Manufactures,  2  volumes, 
10,12.  It  published  also  in  1912  a  Glossary  (explanatory  and  statistical 
list)  on  the  chemical  schedule. 

These  publications  contain  a  mass  of  information  of  high  value  for  the 
study  of  industrial  history  as  well  as  for  that  of  the  tariff.  Yet  it  can  not 
be  said  that  they  influenced  seriously  the  tariff  legislation  of  1913.  Some 
Republicans  in  1911—13  made  at  least  ashow  of  proposing  changes  based  on 
the  Board's  investigations  ;  but  the  Democrats  used  them  to  no  considerable 
extent.  The  Board  came  to  an  end  in  1912  through  the  failure  of  Con- 
gress (that  is  of  the  Democrats  in  the  House)  to  make  appropriations  for  it. 


THE  TARIFF  ACT  OF  1913-  425 

suits  of  an  expert  board's  inquiries  should  be  at  hand  was 
to  give  up  their  golden  opportunity.  They  had  control 

for  the  first  time  in  many  years  pf  all  branches  of  the 

"f  v 

national  legislature, — not  only  the  House  and  the  Presi- 
dency, but  even  the  Senate.  Their  time  had  come,  and 
to  have  waited  would  have  been  politically  suicidal.1 

Among  the  changes  in  duties  made  in  the  act  of  1913 
by  far  the  most  conspicuous  and  important  were  those  on 
sugar  and  wool.  Both  were  admitted  free  ;  wool  at  once, 
and  sugar  after  an  interval  of  two  and  a  half  years. 

The  duty  on  sugar  under  the  acts  of  1897  and  1909, 
it  will  be  remembered,  had  been  one  and  two-thirds  cents. 
The  duty  became  one  and  one-quarter  cents  a  pound,  until 
May  I,  1916;  after  that  date  all  sugar  to  be  admitted 
free.  The  transitional  duty  of  one  and  one-quarter  cents 
a  pound  remained  subject  to  the  reduction  of  20  per  cent, 
for  sugar  from  Cuba. 

There  were  some  clear  advantages  in  the  course  thus 

1  Something  which  might  possibly  be  equivalent  to  the  work  of  the  Tariff 
Board  was  provided  in  one  of  the  closing  paragraphs  of  the  act  of  1913 
(Section  IV,  Paragraph  R)  under  which  "The  President  shall  cause  to  be 
ascertained  each  year,  the  amount  of  imports  and  exports  of  the  articles 
enumerated  in  the  various  paragraphs  in  section  one  of  this  act  and  cause 
an  estimate  to  be  made  of  the  amount  of  the  domestic  production  and  con- 
sumption of  said  articles,  and  where  it  is  ascertained  that  the  imports  under 
any  paragraph  amount  to  less  than  5  per  cent,  of  the  domestic  consumption 
of  the  articles  enumerated  he  shall  advise  the  Congress  as  to  the  facts  and 
his  conclusions  by  special  message,  if  deemed  important  in  the  public 
interest."  The  notion  of  a  competitive  tariff  seems  to  underlie  the  provi- 
sion. Nothing  is  said  about  cost  of  production,  which  played  so  large  a 
part  in  the  instructions  to  the  old  Tariff  Board  and  in  its  investigations. 


426  HISTORY  OF  THE  EXISTING  TARIFF. 

taken.  In  the  first  place,  the  sugar  duty  contributed 
heavily  to  the  customs  revenue.  The  income  tax,  which 
was  expected  to  make  up  for  loss  in  the  customs  revenue, 
would  almost  certainly  require  time  for  working  out  its 
full  yield.  The  temporary  retention  of  the  sugar  duty 
eased  the  process  of  fiscal  rearrangement.  Second,  the 
sugar  producers  were  given  time  for  readjustment  to  new 
conditions.  The  production  of  raw  sugar,  whether  cane 
or  beet,  is  in  these  modern  days  a  manufacturing  industry 
almost  as  much  as  an  extractive  one.  The  abolition  of 
the  sugar  duty  presented  squarely  the  problem  of  vested 
interests  in  an  industry  with  a  large  investment  of  fixed 
capital.  In  all  such  cases  there  is  good  ground  for  post- 
poned reductions.  Finally,  for  eventual  free  sugar  there 
was  the  strong  tactical  and  political  argument  that  thereby 
the  cost  of  living  would  be  reduced.  Few  economists 
would  subscribe  to  the  statement,  often  made  by  the 
Democrats  and  embodied  in  their  platform,  that  the  tariff 
system  was  the  main  cause  of  that  general  rise  in  prices 
which  people  describe  as  the  high  cost  of  living.  But 
here  was  one  commodity  universally  consumed,  made 
dearer  by  the  duty,  and  tolerably  certain  to  become 
cheaper  after  its  remission. 

It  is  difficult  to  see  how  anything  could  be  said  in 
favor  of  free  sugar  on  the  principle  of  a  competitive  tariff, 
or  on  that  of  attacking  only  the  "  illegitimate  "  industries. 
So  far  as  raw  sugar  is  concerned,  there  had  been  steady 
competition  between  the  domestic  producers,  as  well  as 


THE  TARIFF  ACT  OF  1913.  427 

between  them  and  the  foreign  producers.  The  imports 
of  sugar  had  always  been  large.  The  production  of  cane 
sugar  and  beet  sugar  within  the^JJnited  States  was  as 
legitimate  as  could  be  the  case  with  any  highly  protected 
industry.  Possibly  the  circumstance  that  the  sugar  plant- 
ers of  Hawaii  and  Porto  Rico,  and  in  less  degree  those  of 
Cuba  and  the  Philippines,  had  been  among  the  bene- 
ficiaries of  protection,  may  have  promoted  an  unrelenting 
attitude.  Yet  in  the  main  the  abolition  of  the  duty, 
while  tactically  justified  as  a  move  toward  lowering  the 
cost  of  living,  could  be  defended  with  consistency  only 
on  the  ground  that  a  cheap  supply  from  abroad  is  better 
than  a  dear  supply  at  home.  This  is  the  gist  of  the 
principle  of  free  trade. 

What  has  been  said  of  free  sugar  holds  for  the  complete 
and  immediate  abolition  of  the  duty  on  wool.  In  their 
tariff  bills  of  1911  and  1912,  the  Democrats  had  not  ven- 
tured to  go  so  far.  It  had  been  proposed  to  leave  the 
duty  on  wool  at  20  per  cent.  Through  the  influence  of 
President  Wilson,  the  bolder  step  was  taken  of  admitting  it 
free  once  for  all.  It  will  be  remembered  that  this  had 
been  the  one  radical  change  made  in  the  ill-starred  tariff 
act  of  I894.1  In  urging  the  same  step  in  1913,  President 
Wilson  showed  the  unhesitating  courage  which  won  the 
respect  of  his  opponents  no  less  than  of  his  friends.  It 
happened  that  the  juncture  was  favorable  for  the  change. 
A  sweeping  reduction,  perhaps  amounting  to  complete 

See  p.  291,  above. 


428          HISTORY  OF  THE  EXISTING  TARIFF. 

abolition,  had  been  on  the  cards  for  so  many  months  that 
the  market  had  adjusted  itself  to  the  prospect,  and  the  price 
of  wool  had  been  for  some  time  on  a  free  wool  basis. 

Here  again  none  of  the  current  formulas  were  applica- 
ble in  justification  of  so  sweeping  a  change, — neither  those 
of  the  Democrats  nor  those  of  the  Republicans.  The 
Republican  formula  about  equalizing  cost  of  production 
had  indeed  been  shown  to  be  quite  impossible  of  appli- 
cation. The  excellent  report  of  the  Tariff  Board  had 
made  it  clear  that  the  expense  of  producing  wool  under 
the  ordinary  farming  conditions  was  impossible  of  any 
precise  demarcation,  and  that  even  for  wool  produced 
under  ranching  conditions  cost  varied  so  much  in  differ- 
ent regions  as  to  make  the  equalization  formula  useless.1 
The  principle  of  a  competitive  tariff  was  quite  as  unser- 
viceable. The  wool  duty  had  for  many  years  been  com- 
petitive ;  that  is,  the  imports  had  been  continuous,  and 
had  tended  to  grow.  So  far  as  revenue  was  concerned, 
complete  abolition  unmistakably  meant  a  fiscal  loss.  Nor 
could  it  be  said  that  wool  growing  was  an  illegitimate 
industry,  except  from  the  free  trade  point  of  view.  A 
clear  decision  seems  to  have  been  made  against  even  the 
veiled  and  apologetic  arguments  or  protection. 

The  necessary  corollary  of  free  wool  was  the  abolition 
of  the  compensating  (specific)  duties  upon  woollen  goods. 

1  See  the  Tariff  Board's  Report  on  Wool  and  Manufactures  of  Wool 
(1912);  especially  vol.  i.,  pp.  10-11,  and  vol.  ii.,  p.  376.  Cf.  the  articles 
by  Mr.  W.  S.  Culbertson,  referred  to  below  (p.  431). 


THE  TARIFF  ACT  OF  1913- 

They  went  by  the  board,  as  they  had  gone  in  1894.  Only 
the  ad  valorem  duties  upon  woollen  goods  were  retained  ; 
and  these  were  substantially  reduced.  It  will  be  recalled 
that  the  ad  valorem  duties  of  1897  and  1909  had  been, 
upon  most  goods,  50  and  55  per  cent  Even  in  1894,  the 
duty  on  woollens  had  been  left,  on  the  more  important 
classes  of  goods,  as  high  as  50  per  cent.  On  almost  all 
of  the  woollen  fabrics  concerning  which  controversy  had 
been  waged  the  rate  now  was  reduced  to  35  per  cent. 
Yarns  remained  dutiable  at  20  per  cent.,  tops  at  15  per 
cent.  The  rates  on  carpets  ranged  from  20  to  35  per  cent. 
The  35  per  cent,  rate  thus  established  was  that  of  the  origi- 
nal compensating  act  of  I86/.1 

Nominally,  the  reduction  in  protection  on  woollens  was 
solely  in  the  reduced  ad  valorem  rate  only.  In  fact,  how- 
ever, the  abolition  of  the  specific  compensating  duties 
meant  a  further  reduction  of  protection.  As  was  well- 
known  to  every  one  who  had  given  attention  to  the  com- 
plexities of  Schedule  K,  these  compensating  duties  had 
given  not  a  little  concealed  protection.  They  had  been 
more  than  enough  to  accomplish  their  nominal  object, 
that  of  simply  offsetting  the  influence  of  the  wool  duty  in 
raising  the  domestic  price  of  wool.  This  additional  con- 
cealed protection  had  not  been  in  the  main  the  conse- 
quence, as  was  so  often  charged,  of  deliberate  plotting  or 
manipulation.  It  had  been  the  result  of  gradual  and  in 
some  respects  unexpected  changes  in  the  development  of 

1  See  p.  204,  above. 


430  HISTORY  OF  THE  EXISTING  TARIFF. 

the  industry.1  Whatever  the  process  by  which  the  result 
had  been  brought  about,  the  duties  on  woollen  goods, 
reckoning  together  both  the  specific  compensating  duty 
and  the  supposedly  protective  ad  valorem  duty,  had  be- 
come extremely  high.  They  had  ranged  as  high  as  100 
per  cent,  on  the  few  goods  that  continued  to  be  imported, 
and  were  equivalent  to  140  or  150  per  cent,  on  most 
foreign  goods,  which  naturally  did  not  continue  to  be  im- 
ported in  face  of  these  prohibitive  rates. 

Here  was  a  great  decline  in  rates, — from  100  per  cent, 
or  more,  to  35  per  cent,  or  less, — leading  the  public  to 
expect  a  marked  fall  in  prices.  But  it  was  quite  certain 
that  the  effect  of  the  change  would  not  be  so  great  as  if — 
this  is  often  assumed  in  popular  discussion — every  cut  in 
duty  necessarily  brought  a  corresponding  change  in  price. 
The  duties  on  woollens,  to  repeat,  had  been  in  the  main  pro- 
hibitory. Domestic  woollens  had  the  field  to  themselves, 
and  competition  among  the  domestic  makers  kept  the 
prices  of  most  goods  within  the  range  fixed  by  expenses 
of  production  within  the  country.  Those  expenses  of  pro- 
duction were  unquestionably  made  higher  because  the  raw 
material,  wool,  was  raised  in  price  by  the  duty.  In  what 
degree  the  strictly  manufacturing  expenses  also  were 
higher  than  in  foreign  countries  was  extremely  difficult  to 

1  On  the  concealed  protection  from  the  compensating  duties,  see  the 
Tariff  Board's  Report,  vol.  i.,  pp.  124,  133,  147,  and  numerous  other  pas- 
sages. In  at  least  one  instance,  that  of  the  duty  on  rugs,  the  compensating 
figure  seems  to  have  been  raised  by  deliberate  manipulation  ;  see  p.  184  of 
the  Report. 


THE  TARIFF  ACT  OF  1913.  431 

make  out.  If  the  35  per  cent,  duty  simply  offset  higher 
manufacturing  expenses  within  the  country,  the  change 
made  in  the  woollen  duties  could  prove  but  nominal,  sub- 
stituting a  sufficiently  effective  protecting  duty  for  a 
needlessly  high  and  prohibitory  one. 

It  would  seem  that  in  this  case  the  Democrats  strove 
to  apply  the  competitive  principle.  The  inquiries  of  the 
defunct  Tariff  Board,  and  some  further  calculations  based 
upon  them,  indicated  that  a  duty  of  35  per  cent,  would 
correspond  roughly  to  the  difference  in  expenses  of  pro- 
duction between  American  and  foreign  manufacturers.1 

The  duty  of  1913  might  then  be  expected  to  enable  the 
domestic  producers  to  hold  their  own.  But  the  differ- 
ences were  great  between  the  various  classes  of  goods.  It 
was  to  be  expected  that  some  woollens,  especially  those  of 
the  cheap  and  medium  grades,  would  continue  to  be 
manufactured  within  the  country  under  the  new  con- 
ditions ;  while  others,  of  finer  quality,  would  be  imported 
in  larger  amounts,  displacing  to  some  unpredictable  extent 
the  domestic  goods.  Predictions  of  universal  disaster, 
such  as  many  protectionists  uttered  (largely  in  the  vain 
hope  of  staving  "off  the  reductions),  would  not  be  verified. 
But  the  outcome  necessarily  had  to  remain  uncertain  for 
some  years.  Time  must  be  allowed  for  the  operation  of 
legislation  of  this  kind.  The  act  of  1894,  as  has  already 

1  See  the  excellent  article  by  Mr.  W.  S.  Culbertson,  in  the  American 
Economic  Review,  March,  1913,  which  summarized  the  results  of  the  Tariff 
Board's  investigations  and  added  some  valuable  calculations  of  his  own. 


432  HISTORY  OF  THE  EXISTING  TARIFF. 

been  said,1  had  not  been  left  in  force  long  enough  to  make 
clear  the  consequences  of  the  similar  changes  then  made. 
Only  if  the  provisions  of  the  act  of  1913  were  allowed  to 
work  out  their  effects  for  an  appreciably  longer  period, 
could  it  be  seen  what  would  prove  to  be,  under  normal 
and  settled  conditions,  the  relations  of  foreign  and  of 
domestic  supply. 

On  cotton  goods  the  reductions  were  not  dissimilar  in 
character  and  in  effect  from  those  in  the  ad  valorem 
rates  on  woollens.  The  changes  on  the  statute  book  were 
great.  But  in  this  case  also  the  consequences  in  trade 
and  industry  were  likely  to  be  much  less  considerable 
than  in  the  figures. 

The  rate  on  the  lowest  counts  of  cotton  yarns  was  but 
5  per  cent.  On  the  cheapest  grade  of  unprinted  and 
unbleached  cotton  cloths,  it  was  j\  per  cent.  For  finer 
grades,  the  rates  rose  progressively,  the  highest  on  yarns 
being  25  per  cent.,  and  on  plain  cloths  2/J  per  cent.  An 
additional  duty  of  2j  per  cent,  was  imposed  in  all  cases 
on  cloths  bleached,  dyed,  printed,  or  mercerized.  The 
maximum  duty  on  cloths  was  thus  30  per  cent.  On 
ordinary  hosiery,  the  rate  was  20  per  cent. ;  but  on  hosiery 
fashioned  and  shaped,  comparatively  high  duties  were 
retained, — 40  per  cent,  if  the  value  was  70  cents  per  dozen 
or  less,  50  per  cent,  if  the  value  exceeded  70  cents.  This 
was  one  of  the  comparatively  few  cases  in  which  the 
much-abused  fence  system  (abrupt  steps  in  the  rate  of 

1  See  p.  334,  above. 


THE  TARIFF  ACT  OF  1913-  433 

duty,  when  goods  get  beyond  a  given  value  point)  was 
retained.  Cotton  knit  goods,  in  general,  were  dutiable 
at  30  per  cent,  and  the  drag-net  clause  ("manufactures  of 
cotton  not  specially  provided  for'")  had  30  per  cent. 
Cotton  gloves,  which  had  been  affected  by  one  of  the 
"  jokers"  of  IQOO,,1  were  dutiable  at  35  per  cent. 

These  figures,  to  repeat,  made  very  radical  changes 
from  those  previously  on  the  statute  book.  But,  to 
repeat  once  more,  on  most  of  the  goods  the  reduction 
was  but  nominal.  The  cheaper  grades  of  cottons  are 
produced  in  the  United  States  as  cheaply  as  in  any 
country.  Barring  occasional  specialties,  no  such  goods 
are  imported.  They  are  exported  from  the  United 
States,  not  imported.  Goods  of  medium  grade,  though 
not  exported,  would  hardly  be  imported  in  considerable 
quantities  even  under  complete  free  trade ;  and  the  ad 
valorem  duties  imposed  in  1913  continued  to  keep  the 
domestic  market  securely  in  the  hands  of  the  American 
manufacturers.  It  was  the  finer  grades  of  goods  that  were 
most  likely  to  be  affected.  The  importation  of  these 
had  continued  even  in  face  of  the  previous  high  duties, 
and  was  likely  to  be  stimulated  by  the  lower  rates.  It 
was  these  also  which  had  been  most  affected  by  the  specific 
duties  of  the  earlier  tariff  acts.  The  adjustment  of 
the  specific  duties  had  been  undertaken  at  the  behest 
of  the  domestic  manufacturers,  or  at  all  events  at  their 
suggestion,  and  had  been  so  devised  as  to  impede  most 

1  See  p.  402,  above. 


434  HISTORY  OF  THE  EXISTING  TARIFF. 

effectively  the  competition  of  the  foreign  manufacturers. 
No  doubt  in  most  of  these  cases  the  duties  were  need- 
lessly high.  They  were  prohibitory,  as  they  were  in  the 
case  of  most  woollen  goods ;  and  the  continuing  importa- 
tions consisted  largely  of  specialties  which  held  their  own 
in  the  market  notwithstanding  prices  much  enhanced  by 
the  duties.  In  the  case  of  the  finer  cotton  goods,  as  in 
that  of  the  finer  woollen  goods,  there  was  likely  to  be 
some  displacement  of  domestic  products  by  foreign. 

All  the  duties  on  cotton  goods  were  now  assessed  by 
value.  Except  for  the  retention  of  a  remnant  of  the 
fence  system  in  the  hosiery  duties,  not  a  specific  rate 
appeared  in  the  entire  schedule.  This  radical  change 
was  made  the  occasion  for  severe  criticism,  on  the 
familiar  ground  that  ad  valorem  duties  tempt  to  under- 
valuation and  fraud.  The  criticism  was  not  without 
basis ;  and  yet  the  adoption  of  the  ad  valorem  system 
was  almost  inevitable.  It  was  in  no  small  part  the  result 
of  abuses  in  the  previous  adjustment  of  the  specific 
duties.  The  cotton  schedule  had  been  a  highly  intri- 
cate one,  with  duties  varying  according  to  the  count 
of  threads  per  square  inch,  the  number  of  yards  to  the 
pound,  the  bleaching,  coloring,  and  staining,  and  finally 
with  a  most  elaborate  fence  system  of  value  points.  Just 
what  the  whole  intricate  array  signified  could  be  known 
only  to  persons  conversant  with  every  detail  of  the 
industry;  that  is,  chiefly  to  the  manufacturers  themselves. 
It  was  more  than  suspected  that  the  manufacturers,  in 


THE  TARIFF  ACT  OF  1913-  435 

their  suggestions  to  the  friendly  legislators  of  former 
days,  had  manipulated  the  rates  in  such  manner  as  to 
secure  not  only  high  protection,  /b,ut  higher  protection 
than  would  have  been  granted  if  the  significance  of  the  rates 
had  been  fully  understood.  Charges  of  this  sort,  though 
doubtless  exaggerated,  were  not  without  foundation. 
In  the  act  of  1909  itself,  which  had  professed  to  reduce 
duties,  some  changes  had  been  made,  and  more  had  been 
attempted,  for  increasing  the  intricate  specific  duties  in  a 
fashion  not  straightforward.1  In  view  of  this  familiar 
situation  it  was  to  be  expected  that  the  Democrats  should 
cut  loose  once  for  all  from  the  specific  system,  and  sub- 
stitute ad  valorem  duties,  which  tell  their  tale  on  their 
face.  Moreover,  the  temptation  to  undervaluation  was  not 
likely  to  be  considerable  under  duties  as  moderate  as 
most  of  those  in  the  cotton  schedule  of  1913.  This 
temptation  becomes  progressively  greater  as  duties  be- 
come higher,  and  is  least  when  duties  are  low.  Although 
no  hard  and  fast  rule  can  be  laid  down,  it  is  probable 
that  duties  of  30  per  cent,  ad  valorem  can  be  collected 
on  goods  of  a  standard  sort  as  honestly  and  efficiently 
as  elaborate  specific  duties.  The  danger  point  in  these 
matters  seems  to  be  reached  with  duties  as  high  as  40 
per  cent.,  certainly  with  duties  as  high  as  50  per  cent. 
It  is  naturally  greatest  for  goods  not  of  a  standard 
character,  whose  current  market  prices  are  difficult  to 
check.  It  happens  that  cottons  precisely  of  this  kind 

1  See  the  reference  given  above,  p.  388,  note  2. 


436  HISTORY  OF  THE  EXISTING  TARIFF. 

had  been  subject  to  ad  valorem  duties  in  the  tariff  acts  of 
former  years.  As  regards  these,  the  difficulties  were 
made  less  rather  than  greater,  since  the  ad  valorem  rate 
was  lowered ;  while  on  the  goods  formerly  subject  to 
specific  duties,  neither  the  rate  nor  the  character  of 
the  goods  was  such  as  to  make  the  system  unworkable. 

The  duties  on  silks  were  readjusted  on  the  same 
principle  as  those  on  cottons.  Ad  valorem  duties  were 
substituted  throughout  for  specific.  The  general  rate  on 
silk  fabrics  was  made  45  per  cent.;  on  velvets  and  plushes,  50 
per  cent.  In  the  Senate,  amendments  were  inserted  re- 
taining (though  with  some  reductions)  the  previous  system 
of  rates  by  the  pound.  But  the  House  refused  to  concur 
in  these  amendments  and  the  act  as  finally  passed  swept 
away  almost  every  specific  duty  in  the  silk  schedule. 

In  this  case  also  the  abolition  of  specific  duties  was 
due  in  large  part  to  a  feeling  of  suspicion  concerning 
their  intent  and  real  effect.  The  highly  complex  system 
adopted  in  1897,  and  retained  in  1909,  had  been  devised 
nominally  by  the  customs  officials,  but  at  the  least  with 
the  advice  and  concurrence  of  the  manufacturers.  The 
plea  which  had  been  advanced  for  the  change  from  ad 
valorem  to  specific  rates  was  that  thus  only  could  under- 
valuation and  fraud  be  prevented.  Beyond  doubt 
undervaluation  had  been  common  and  sometimes  fla- 
grant. Beyond  doubt,  also,  it  was  lessened  after  1897; 
though  by  no  means  entirely  prevented,  since  under 
the  drag-net  clause  a  considerable  part  of  the  imports 


THE  TARIFF  ACT  OF  1913.  437 

still  remained  subject  to  an  ad  valorem  duty.1  On  the 
other  hand,  so  intricate  was  the  classification,  so  fine  and 
minute  were  the  lines  of  gradation^in  the  specific  duties, 
so  troublesome  was  it  to  check  inaccurate  and  even 
fraudulent  statements,  so  difficult  to  find  competent 
supervisors  at  the  meager  salaries  offered  by  the  govern- 
ment, that  the  working  of  the  new  system  seems  to  have 
proved  in  practice  not  greatly  superior  to  that  of  the 
old.  But  these  administrative  difficulties  were  not 
decisive  in  bringing  about  the  complete  return  to  the 
old  ad  valorem  plan.  It  was  tolerably  certain  that  the 
elaborate  specific  duties  contained  some  "  jokers ";  and 
any  readjustment  of  them,  calling  of  necessity  for  advice 
from  the  same  persons  that  had  planned  them  at  the 
outset,  was  likely  still  to  retain  jokers.  The  certain 
method  of  getting  rid  of  this  wretched  adjunct  of  the 
tariff  legislation  of  previous  years  was  to  maintain  ad 
valorem  duties  throughout. 

The  rates  on  silk  fabrics  were  left  comparatively  high; 
on  most  goods  45  per  cent.  The  reductions  were  by 
no  means  so  great  as  those  on  cottons  and  woollens. 
This  remained  true,  even  after  making  allowance  for  the 
circumstance  that  a  duty  of  45  per  cent,  is  much  more 
likely  to  be  shaved  by  undervaluation  than  is  one  of 
30  per  cent.;  making  allowance,  too,  for  the  further 

i  All  silks  on  which  the  specific  duties  did  not  amount  to  as  much  as  45$ 
or  50$  (the  rate  varied  on  different  goods)  had  been  left  dutiable  in  1897 
and  1909  at  these  ad  valorem  rates  as  minima. — See  what  is  said  on  the 
silk  duties,  above,  pp.  248,  337. 


438  HISTORY  OF  THE  EXISTING  TARIFF. 

circumstance  that  the  unusual  variety  in  silk  fabrics 
makes  it  difficult  to  check  importers'  statements  of 
market  value  and  impedes  the  detection  of  undervalua- 
tions. The  silk  manufacturers  got  off  easily.  The 
explanation  apparently  is  that  silks  were  regarded  as 
luxuries,  and  therefore  properly  subject  to  duties  higher 
than  on  other  textiles.  It  need  hardly  be  said  that  if 
taxes  on  luxuries  are  to  be  imposed  on  strict  revenue 
principles,  and  with  the  design  of  reaching  persons  who 
can  well  afford  to  pay,  they  should  be  imposed  upon 
the  domestic  article  as  well  as  upon  the  foreign.  To 
fix  a  customs  duty,  for  purposes  of  revenue,  at  a  point 
so  high  as  greatly  to  impede  importation,  almost  to 
prohibit  it,  is  obviously  stultifying.  There  is  ground 
for  suspecting  that  something  precisely  of  this  sort  was 
done  in  1913,  in  the  case  of  the  silk  duties.  The  rates 
remained  prohibitory  on  most  silks.  A  lower  range  of 
rates  would  probably  have  yielded  more  revenue,  and 
would  have  been  more  in  accord  with  the  competitive 
principle. 

The  silk  manufacture,  as  it  happens,  had  reached  the 
stage  where  there  was  good  ground,  on  other  than  bare 
revenue  principles,  for  a  reduction  of  duties.  It  had 
had  for  half  a  century  an  unusually  high  degree  of 
protection.  It  had  grown  with  extraordinary  rapidity 
to  very  great  dimensions.  Its  character  had  been 
entirely  changed.  The  development  was  not  only 
quantitative  but  qualitative.  It  may  present  a  case — 


THE  TARIFF  ACT  OF  1913.  439 

I  am  not  convinced  that  it  does,  but  at  least  the  possi- 
bility is  present — of  successful  protection  to  young 
industries.  The  duties  had  becon^e  prohibitory  on  most 
silk  goods,  as  they  had  on  woollens.  The  rates  could 
have  been  reduced  much  more  without  disturbance  to 
the  bulk  of  the  industry.  The  time  would  seem  to  have 
come  for  application  of  at  least  some  approach  to  the 
final  test  in  the  young-industry  argument, — an  incisive 
reduction  of  duties,  in  order  to  ascertain  whether  the 
industry  leaned  less  on  protection  than  when  first  sup- 
ported and  had  made  progress  toward  eventual  in- 
dependence. 

Another  schedule  upon  which  the  reduction  of  duty 
was  less  than  might  have  been  expected  was  that  on 
pottery  and  earthenware.  Here  also  duties  were  left 
comparatively  high,  apparently  on  fiscal  grounds.  The 
changes  in  rates  on  the  significant  articles  were  as 
follows : 

Act  of  1909        Act  of  1913 

Earthenware  and  crockery,  not  col- 
ored or  ornamented     .         .         .  55$  35# 

Crockery,  colored  or  ornamented     .  6o#  40^ 

China    and    porcelain    ware,    not 

colored  or  ornamented          .         .  55^  50$ 

China  and  porcelain  ware,  colored 

or  ornamented 6o#  55# 

The  cheaper  grades,  classed  as  earthenware  and 
crockery  (whether  plain  or  ornamented),  were  largely  pro- 
duced in  the  United  States.  Though  the  imports  were 
not  inconsiderable,  the  domestic  manufacturers  in  the 


440  HISTORY  OF  THE  EXISTING  TARIFF. 

main  held  the  field.  The  case  was  the  reverse  with  the 
finer  grades, — china  and  porcelain  ware, — on  which  it 
will  be  seen  that  high  duties  were  retained.  These  were 
chiefly  imported,  and  might  be  fairly  regarded  as  articles 
of  luxury.  The  duties  on  them  being  mainly  revenue 
duties,  there  was  no  reason  why  they  should  not  be  left 
comparatively  high.  No  doubt  the  problem  of  under- 
valuation remained.  It  had  been  the  occasion  of  much 
trouble  in  the  past,  and  might  not  improbably  continue 
to  be  so  in  the  future.  On  earthenware  and  crockery 
proper,  where  the  duties  were  left  at  35  and  40  per  cent., 
the  situation  was  different.  These  were  distinctly  pro- 
tective duties,  and  moreover  so  high  on  many  grades  as  to 
be  prohibitory.  On  the  competitive  or  fiscal  principle,  it 
would  seem  that,  like  the  silk  duties,  they  might  have 
been  lowered  even  more  than  was  done. 

The  duties  on  iron  and  steel  caused  comparatively  little 
debate,  as  had  been  the  case  in  1909.  It  had  become 
more  obvious  than  ever  that  the  center  of  interest  in  the 
protective  controversy  had  shifted  from  the  iron  schedule 
to  others,  especially  to  Schedule  K  (wool  and  woollens). 
The  progressive  reduction  of  duties  which  had  gone  on 
since  1890  was  carried  a  stage  further.  Not  only  iron  ore 
was  made  free  of  duty,  but  also  pig-iron,  scrap-iron  (already 
made  free  in  1909),  iron  in  slabs  and  blooms,  Bessemer 
steel  ingots,  and  those  forms  of  crude  iron  which  are  used 
for  admixture  in  the  steel-making  processes,  such  as  spiegel- 
eisen  and  ferro-manganese.  Barbed  wire  and  galvanized 


THE  TARIFF  ACT  OF  1913.  441 

wire,  such  as  is  used  for  fencing,  also  became  free :  a 
concession  to  the  farmers  which  under  the  actual  conditions 
of  supply  was  of  little  real  consequence.  Steel  rails  too 
went  on  the  free  list.  Moderate  ad  valorem  duties  were 
imposed  on  other  manufactures  of  iron,  rising  as  the 
products  became  further  advanced  beyond  the  crude  stage. 
Bar  iron,  for  example,  was  dutiable  at  5  per  cent.,  steel 
bars  at  8  per  cent.,  structural  shapes  at  10  per  cent.  Tin 
plate,  that  old  bone  of  contention,  got  15  per  cent. ;  tubes 
and  pipes,  20  per  cent.  The  drag-net  clause,  on  manufac- 
tures of  iron  and  steel  "not  otherwise  provided  for,"  im- 
posed 20  per  cent., — no  small  reduction  from  the  previous 
duty  of  45  per  cent. 

A  sweeping  clause  put  all  agricultural  implements  on 
the  free  list.  "  Plows,  harrows,  headers,  harvesters,"  and 
so  on  in  an  extended  enumeration ;  "  cotton  gins,  ma- 
chinery for  use  in  the  manufacture  of  sugar,  wagons  and 
carts,  and  all  agricultural  implements  of  any  kind  or  de- 
scription, whether  specifically  mentioned  herein  or  not, 
including  repair  parts," — all  were  admitted  free.  The  ef- 
fects to  be  expected  from  this  clause  were  typical  of  those 
to  be  expected  from  the  changes  in  the  iron  schedule,  and 
indeed  from  the  act  at  large.  Most  of  the  articles  were  not 
likely  to  be  imported,  nor  were  their  prices  likely  to  be 
lowered.  As  a  rule,  agricultural  implements  are  made  in 
the  United  States  not  only  as  cheaply  as  in  foreign  coun- 
tries, but  more  cheaply.  They  are  great  articles  of  ex- 
port. This  is  true  especially  of  agricultural  "  machinery  " 


442  HISTORY  OF  THE  EXISTING  TARIFF. 

in  the  narrower  sense, — headers,  harvesters,  threshing 
machinery ;  it  is  true  also  of  such  implements,  hardly  to 
be  classed  under  "  machinery,"  as  plows,  harrows,  horse- 
rakes,  drills,  wagons  and  carts.  It  is  true  even  of  most  of 
those  implements,  of  a  still  simpler  sort,  which  have  come 
down  with  comparatively  little  change  from  older  days, — 
scythes,  sickles,  hoes,  spades,  and  the  like.  Yet  among  the 
last  mentioned,  though  as  a  rule  the  American  tools  are  as 
cheap  in  price  as  the  foreign,  or  superior  in  quality  and  effec- 
tiveness, there  were  at  this  time  some  which  could  perhaps 
be  made  more  cheaply  abroad  and  hence  were  likely  to  be 
imported.  A  few  specialties,  like  sheep  shears,  hedge  shears, 
pruning  shears,  seemed  to  belong  in  the  class  of  importable 
implements ;  their  free  admission  meant  lower  prices,  and 
embarrassment,  at  the  least,  for  domestic  producers. 

In  the  main,  however,  the  changes  in  the  iron  and  steel 
schedule  signified  little.  There  might  be  an  increase  in 
the  importation  of  certain  specialties ;  and  some  seaboard 
regions,  more  easily  reached  from  abroad  by  water  than 
from  the  centers  of  domestic  production  by  land,  might 
import  sporadic  supplies  of  crude  iron.  In  the  main,  the 
course  of  production  within  the  country,  the  sources  of 
supply,  the  range  of  prices,  would  not  be  affected.  The 
time  had  gone  by  when  the  protective  system  was  of  real 
consequence  for  the  iron  and  steel  industries.  For  good 
or  ill,  it  had  done  its  work. 

Some  minor  items  may  be  briefly  noted.  Hides,  made 
free  in  the  act  of  1909  after  so  hot  a  debate,  of  course  re- 


THE  TARIFF  ACT  OF  1913.  443 

mained  free ;  and  now  leather,  and  boots  and  shoes  as 
well,  were  added  to  the  free  list.  Wheat  and  flour,  cattle 
and  meats  were  also  free.  In  the JHouse  an  endeavor  was 
made  to  retain  duties  on  wheat  and  cattle,  while  abolish- 
ing those  on  flour  and  meats ;  an  attempt  to  relieve  the 
consumer  and  yet  keep  a  show  of  protection  for  the 
farmer,  which  was  obviously  stultifying.  Good  sense 
prevailed  in  the  end,  and  the  duties  on  all  these  food 
products  were  swept  away.  The  change  was  not  likely 
to  be  of  moment  for  the  immediate  future, — barring 
some  border  trade,  and  occasional  importations  in  bad 
seasons.  Eggs,  milk,  cream,  went  on  the  free  list :  again 
articles  in  which  only  a  small  border  trade  would  be  en- 
couraged. Coal  and  lumber  also  went  on  the  free  list  at 
last;  the  remnants  of  duties  retained  in  1909  were  swept 
away. 

A  general  anti-dumping  section  was  maintained,  sub- 
stantially the  same  as  that  in  the  tariff  act  of  1909. 
The  Secretary  of  the  Treasury  was  authorized  to  impose 
additional  duties  equal  to  the  amount  of  any  grant  or 
bounty  on  exportation  given  by  any  foreign  country. 
The  provisions  for  maximum  and  minimum  duties,  which 
played  so  large  a  part  in  the  debates  on  the  tariff  of  1909, 
were  dropped  entirely. 

The  wide  use  of  ad  valorem  duties  called  for  a  re- 
vision of  the  administrative  sections  commonly  tacked 
on  to  revenue  acts.  This  part  of  the  tariff  system  had 
given  occasion  for  constant  patching,  from  1789  to  the 


444  HISTORY  OF  THE  EXISTING  TARIFF. 

present  day.  Even  in  the  acts  of  1890,  1897,  and  1909, 
in  which  ad  valorem  duties  were  replaced  by  specific, 
wherever  thought  feasible,  so  many  of  the  former  re- 
mained that  in  each  successive  measure  the  provisions 
against  fraud  were  made  more  stringent,  or  new  admini- 
strative features  devised.  In  1890,  the  Board  of  General 
Appraisers  had  been  established,  having  power  to  decide 
definitively  on  questions  of  facts  which  previously  had  gone 
to  the  courts  and  clogged  them.  In  1909,  the  Court 
of  Customs  Appeals  was  added,  with  exclusive  jurisdic- 
tion over  the  strictly  legal  questions  arising  under  the 
customs  acts.  It  is  surprising,  in  view  of  the  strong  desire 
of  the  then  dominant  party  to  strengthen  the  protective 
system,  that  the  provisions  concerning  declaration,  valua- 
tion, collectors'  powers,  and  the  like,  should  still  have 
left  so  many  loopholes  for  the  dishonest  importer.  Yet 
this  was  the  case ;  and  modification  of  the  sections  cover- 
ing such  matters  was  still  necessary  in  1913.  It  is  but 
just  to  note  that  the  Taft  Administration  had  given  con- 
sideration to  the  same  problems,  and  had  appointed 
committees  of  Treasury  officials  to  recommend  improve- 
ments. The  Democrats  under  Mr.  Underwood's  lead- 
ership also  gave  them  earnest  attention.  The  pertinent 
sections  of  the  tariff  accordingly  were  largely  rewrit- 
ten. That  they  were  substantially  improved  was  the 
judgment  of  specialists  competent  on  this  intricate  subject.1 

1  See  the  analysis  of  these  sections  made   in   the  Quarterly  Journal  of 
Economics,  Nov.,  1913,  by  Mr.  James  F.  Curtis,  who  was  an  efficient  Assistant 


THE  TARIFF  ACT  OF  igi$.  445 

The  penalties  for  fraud  were  made,  not  indeed  heavier  but 
more  certain  ;  litigation  on  contingent  fees  (a  great  abuse) 
was  prohibited  ;  the  powers  of  collectors  were  strengthened. 
A  clause  that  aroused  strong  opposition  sought  to  give 
opportunity  for  the  examination  of  the  books  of  im- 
porters and  foreign  manufacturers  suspected  of  dishonest 
practices.  After  much  discussion,  and  vehement  protest 
from  persons  interested,  the  clause  was  so  framed  as  to 
give  the  Secretary  of  the  Treasury  discretionary  authority 
to  impose  an  additional  duty  of  15  per  cent,  in  cases 
where  there  was  refusal  to  submit  books  and  records. 
On  other  matters  also  a  discretionary  power  was  given 
the  Secretary  of  the  Treasury :  a  mode  of  procedure 
much  wiser  than  that  of  rigid  prescription  by  law.  Not 
of  least  interest  to  economists  and  others  having  occasion 
to  study  the  course  of  foreign  trade  were  provisions  for 
the  better  collection  and  arrangement  of  the  statistics 
of  imports.  There  was  ground  for  suspecting  these  of 
serious  inaccuracies  in  the  past. 

On  the  whole,  the  administrative  provisions  were  well 
drawn.  How  far  they  would  succeed  in  making  the  new 
system  work  satisfactorily  could  not  be  said  in  advance. 
As  has  already  been  remarked,  no  great  trouble  is  likely 
to  arise  with  ad  valorem  rates  when  they  do  not  exceed 
some  such  figure  as  30  per  cent.  But  when  goods  are 
subjected  to  ad  valorem  duties  as  high  as  45,  50,  55,  even  60 

Secretary  of  the  Treasury  under  theTaft  Administration  and  had  abundant 
experience  with  the  government's  difficulties. 


446  HISTORY  OF  THE  EXISTING  TARIFF. 

per  cent,  (for  example  on  silk  piece  goods,  silk  apparel, 
china  ware)  the  temptation  to  evasion  becomes  so  strong 
that  all  the  penalties  in  the  world  will  not  entirely  pre- 
vent it.  When  specific  duties  are  abandoned  because 
deemed  suspicious  or  impracticable,  the  only  safe  ad- 
ministrative policy  is  to  keep  the  ad  valorem  rates 
moderate. 

It  has  been  pointed  out  time  and  again,  in  the  pre- 
ceding pages,  that  reductions  of  duty  made  in  this  act 
of  1913  were  likely  to  be  without  real  effect.  They 
served  to  lower  duties  that  had  been  prohibitory  or 
abolish  duties  that  had  been  nominal.  Much  the  larger 
part  of  the  changes  were  probably  of  this  sort.  Can  it 
be  said  that  they  were  worth  while  ? 

Beyond  question,  the  consequences  in  industry  and  in 
prices  that  were  likely  to  ensue  were  immensely  exag- 
gerated by  both  sides.  Such  exaggeration  is  the 
inevitable  result  of  the  tariff's  having  become  an  issue 
in  elections.  And  apparently  the  tariff  question  cannot 
be  other  than  one  of  party  politics.  It  is  enveloped 
in  partisan  controversy  quite  as  much  in  England, 
Germany,  France;  and  in  these  countries  also  the  indus- 
trial effects  of  protection  are  constantly  over-stated.  In 
our  own  country,  the  main  channels  of  industry  and 
trade  have  not  been  seriously  deflected  by  the  tariff 
system.  The  great  bulk  of  our  occupations  would  be 
conducted  in  the  same  way  even  under  complete  free 


THE  TARIFF  ACT  OF  1913.  447 

trade.  Such  modifications  as  were  made  in  the  tariff  of 
1913  could  call  for  readjustment  in  only  a  small  part  of 
the  whole  field  of  industry.  And  by  the  same  token, 
they  could  lower  prices  comparatively  little.  The  ex- 
pectation that  the  cost  of  living  would  be  substantially 
lowered  was  doomed  to  disappointment. 

None  the  less,  it  was  worth  while  to  make  the  changes ; 
not  only  those  of  real  consequence,  but  those  of  merely 
nominal  effect.  It  was  worth  while,  if  for  no  other 
reason,  because  it  might  fairly  be  expected  to  put  an 
end  to  the  superstition  that  all  prosperity  was  dependent 
on  the  maintenance  of  a  rigid  protective  tariff.  This 
superstition  had  indeed  been  somewhat  shattered  by  the 
crisis  of  1907  and  the  period  of  depression  that  followed. 
But  it  had  been  so  dinned  into  the  public  ear, — there 
had  been  such  vociferous  predictions  of  general  disaster, 
of  collapse  for  all  manufacturing  enterprises,  of  destruc- 
tion to  the  American  standard  of  living, — that  it  was 
well  to  prove  the  industrial  organism  quite  able  to  survive 
this  general  pruning.  The  unbiased  observer  cannot  but 
wonder  that  the  lugubrious  talk  should  have  had  such  a 
wide  hearing  and  effect.  Not  only  persons  without 
experience  in  larger  business  affairs,but  a  very  consider- 
able proportion  of  business  men  in  positions  of  leadership, 
were  under  this  spell.  A  more  sober  consideration  of  the 
tariff  question  might  be  expected  to  follow  a  proof  of  its 
comparative  unimportance,  and  then  a  greater  attention 
to  the  questions  of  social  and  industrial  organization  which 


HISTORY  OF  THE  EXISTING  TARIFF- 

constitute, after  all,  the  inexorable  problems  of  the  century. 

If  the  reductions  were  not  of  as  great  consequence 
for  the  industries  of  the  country  at  large  as  both  sides 
believed,  they  were  none  the  less  of  the  first  importance 
for  the  protective  system.  The  act  of  1913  manifested  a 
great  change  of  purpose  and  attitude.  This  change  was 
greater  than  that  made  in  1894:  not  only  were  wool  and 
sugar  free,  but  there  were  other  important  additions  to  the 
free  list  and  serious  reductions  in  the  duties  on  almost  all 
manufactures.  No  comparable  reversal  of  general  policy 
had  been  made  for  half-a-century.  We  must  go  back 
to  the  period  just  preceding  the  civil  war,  when  the 
tariff  acts  of  1846  and  1857  were  in  force,  to  find  a 
scale  of  duties  as  moderate.  To  speak  of  the  act  as 
introducing  complete  free  trade  would  be  absurd ;  but 
it  might  well  be  spoken  of  as  beginning  a  policy  of 
much  moderated  protection,  and  of  opening  the  possibility 
of  still  further  changes  in  the  same  direction  at  a  later 
date.  As  has  been  elsewhere  intimated,1  this  method  of 
dealing  with  our  commercial  system  seems  to  be  more  in 
accord  with  the  general  trend  of  industrial  development 
in  the  United  States,  than  the  rigid  protectionism  of  1890, 
1897,  and  1909.  It  looks  to  a  growth  not  of  those 
manufactures  which  are  anxiously  dependent  on  tariff 
protection,  but  of  those  able  to  hold  their  own,  within 
the  country  and  without,  on  terms  of  equality,  or  some- 
thing  approaching  equality,  with  foreign  competitors. 

*  See  p.  358,  above. 


THE  TARIFF  ACT  OF  1913.  449 

Whether  the  policy  of  1913,  will  be  maintained  ;  whether 
the  new  tariff  will  be  allowed  to  remain  in  force  long 

enough  to  permit  its  ultimate  influence  to  be  fully  exerted; 

"f  •  f 
whether  the   whirligig  of   politics  will   bring  a  turn  the 

other  way,  or  eventually  a  still  further  move  in  the  same 
direction, — all  this  the  future  alone  can  tell. 


APPENDIX. 


TABLE  I. 

Imports,  Duties,  and  Ratio  of  Duties  to  Imports,   1860-1907. 
(From  the  "  Statistical^Abstract.") 


(00,000  omitted.) 


Imports. 


Fiscal  Year 
Ending 
June  30. 

Free. 

Dutiable. 

Total. 

Duties 
Collected. 

Per  cent,  of 
Duties  to 
Dutiable  Im- 
ports. 

Percent,  of 
Duties  to 
Total  Im- 
ports. 

1860 

68.4 

267.9 

336.3 

52.7 

19.67 

15.67 

i 

67.4 

207.2 

274.6 

39.0 

18.84 

14.21 

2 

49-8 

128.5 

178.3 

46.5 

36.19 

26.09 

3 

30.0 

195.3 

225.4 

63.7 

32.62 

28.28 

4 

38.2 

262.9 

30I.I 

96.5 

36.69 

32.03 

5 

40.1 

169.6 

209.6 

80.6 

47-56 

38.46 

6 

57-1 

366.3 

423.5 

177.0 

48.93 

41.81 

7 

17.0 

361.1 

378.2 

168.5 

46.67 

44.56 

8 

15-1 

329.7 

344-8 

160.5 

48.63 

46.49 

9 

21.7 

372.7 

394-4 

176.5 

47-22 

44.65 

1870 

20.2 

406.1 

426.3 

191.5 

47.08 

42.23 

i 

40.6 

459-6 

500.2 

202.4 

43.95 

38.04 

2 

47-7 

512.7 

560.4 

212.6 

41.35 

37-00 

3 

178.4 

484.7 

663.1 

184.9 

38.07 

26.95 

4 

151-7 

415.7 

567-4 

100.5 

38.53 

26.88 

5 

146.5 

379-8 

526.3 

!54.5 

40.62 

28.20 

6 

140.6 

324.0 

464.6 

145.2 

44-74 

30.19 

7 

140.8 

299.0 

439-8 

128.4 

42.89 

26.68 

8 

I4I-3 

297.1 

438.4 

127.2 

42.75 

27.13 

9 

142.5 

296.7 

439-3 

133-4 

44.87 

28.97 

1880 

208.0 

4I9-5 

627.5 

182.7 

43.48 

29.07 

r 

202.5 

448.1 

650.6 

193.8 

43-20 

29.75 

2 

210.7 

505-5 

716.2 

216.1 

42.66 

30.11 

3 

206.9 

493-9 

700.8 

210.6 

42-45 

29.92 

4 

211.  3 

456.3 

667.6 

190.3 

41.61 

28.44 

5 

192.9 

386.7 

579-6 

178.1 

45-86 

30.59 

6 

211.5 

413.8 

625.3 

189.4 

45-55 

30.13 

7 

233. 

450.3 

683.4 

214.2 

47-10 

31.02 

8 

244. 

468.1 

712.2 

216.0 

45.63 

29.99 

9 

256. 

484.8 

741.4 

220.6 

45.13 

29.50 

1890 

266. 

507.6 

773-7 

226.5 

44.41 

29.12 

i 

388. 

466.4 

854.5 

216.9 

46.28 

25.25 

2 

458. 

355-5 

813.6 

174.1 

48.71 

21.26 

3 

444.2 

400.3 

844.4 

199.1 

49.58 

23.49 

4 

379-0 

257.6 

636.6 

129.6 

50.06 

20.25 

5 

376.9 

354-3 

731.2 

149.4 

4L75 

20.23 

6 

368.9 

390.8 

759-7 

157.0 

40.18 

20.67 

7 

381.9 

407.3 

789.2 

172.7 

42.41 

21.89 

452 


APPENDIX. 


TABLE  I— Continued. 
Imports. 


Fiscal  Year 
Ending 
June  30. 

Free. 

Dutiable. 

Total. 

Duties 
Collected. 

Per  cent, 
of  Duties 
to  Dutiable 
Imports. 

Per.  cent, 
of  Duties 
to  Total 
Imports. 

1898 

291.5 

295.6 

587.1 

145-4 

48.80 

24.77 

9 

299.7 

385.8 

685.4 

2O2.O 

52.07 

29.48 

1900 

366.8 

463.8 

830.5 

229.4 

49.24 

27.62 

i 

339-1 

468.7 

807.8 

233-6 

49.64 

28.91 

2 

396.5 

503-2 

899.8 

251.5 

49.78 

27-95 

3 

437.3 

570.7 

1,008,0 

280.7 

49-03 

27.85 

4 

454-1 

527.7 

981.8 

258.2 

48.78 

26.30 

5 

5O-i 

570.0 

1,087.1 

258.4 

45.24 

23-77 

6 

548.7 

664.7 

1,213-4 

293-9 

44.16 

24.22 

7 

641.9 

773-4 

,415.4 

329.5 

42.55 

23.28 

8 

525.7 

657.4 

,183-T 

282.3 

42.94 

23.88 

9 

599-4 

682.3 

,281.6 

294-4 

43-15 

22.99 

1910 

761.4 

785.8 

,347.1 

326.3 

41.52 

21.  II 

ii 

777.0 

751  o 

,527.9 

309.6 

41.22 

2O.29 

12 

881.5 

759-2 

,640.7 

304.6 

4O.I2 

18.56 

This  table  is  taken  from  the  "  Statistical  Abstract  of 
the  United  States."  The  figures  given  in  different  edi- 
tions of  the  "  Statistical  Abstract  "  have  not  always  been 
consistent.  Those  given  in  the  table  are  from  the  edition 
of  1891  for  the  earlier  years  (1860-68),  and  from  the  edi- 
tions of  1895  and  1912  for  the  later  years.  They  indicate 
"  net  imports,"  i.e.,  imports  less  re-exports,  for  1860-66; 
from  1867  on,  they  indicate  "imports  for  consumption." 
Substantially,  these  two  forms  of  statement  come  to 
nearly  the  same  thing.  The  significant  changes  will 
be  easily  noted.  The  sharp  rise  in  the  average  rate  (per 
cent,  of  duties  to  imports)  between  1861  and  1865  shows 


APPENDIX.  453 

the  extent  to  which  the  legislation  of  the  war  affected  the 
general  character  of  the  tariff  system.  The  average  rate 
on  dutiable  articles,  after  reaching  its  war  maximum  in 
1866,  declines  somewhat  for  a  few  years  thereafter.  From 
1872  to  1875,  there  is  a  further  fall,  in  consequence  of  the 
ten  per  cent,  reduction  of  1872  ;  after  1875  the  rate  goes 
up  again,  and  then  remains  fairly  steady  until  1883.  The 
act  of  1883  brings  a  distinct  rise  in  the  average  rate  on 
dutiable  articles ;  the  act  of  1890  a  still  further  rise,  bring- 
ing in  1894  the  maximum  for  the  whole  period  (50.06  per 
cent.).  The  abrupt  increase  in  the  free  imports  in  1873  is 
the  result  of  the  abolition  of  the  tea  and  coffee  duties  in 
1872,  which  causes  also  the  fall  in  the  average  per  cent,  of 
the  duties  collected  as  compared  with  the  total  imports. 
The  abolition  of  the  sugar  duty  in  1890  brings  a  similar 
abrupt  increase  of  the  free  imports  in  1891  and  1892,  and  a 
similar  fall  in  the  ratio  of  duties  collected  to  total  imports. 
The  act  of  1894  brings  a  distinct  lowering  of  the  average 
rate  of  duty ;  that  of  1897  raises  the  average  to  the  figures 
that  had  prevailed  under  the  acts  of  1883  an<^  189O.  From 
1897  to  1912  there  is  a  slow  decline  in  the  average  rate  of 
duty,  due  to  the  circumstance  that  the  free  imports  form  a 
larger  proportion  of  the  total,  which  again  is  due  to  a 
tariff  so  high  as  often  to  prohibit  the  importation  of 
dutiable  articles. 


454 


APPENDIX. 
TABLE  II. 


Duties  on  Some  Important  Articles,  Raised  during  the  War,  and 
Retained  without  Reduction  till  1883. 


Articles. 

Duty  under  the  Morrill 
Tariff  of  1861. 

Duty  of  1864,  in  Force  in 
1883. 

Books  

i«?  £ 

2*  < 

Chinaware,  plain   .     . 

x  3  ft 

30  % 

^3  /> 

45* 

Cotton  goods,  not  other- 

wise provided  for    . 

30  # 

35* 

Cottons,       coarse,       un- 

bleached   .... 
Cotton  spool-thread     . 

i  ct.  per  yard. 
30  % 

5  cts.  per  yard. 
6  cts.  per  dozen,   plus 

30  %  (=  60  to  70  #). 

Cottons,  fine  printed  . 

4^  cts.  per  square  yard 
plus  10  % 

5^  cts.  per  square  yard 
plus  20  % 

Manufactures     of     flax, 

jute,     or     hemp,     not 

otherwise  provided  for 

30  % 

40  # 

Glass,  common  window 

i  to  i£  cts.  per  square 

|  to  4  cts.  per*  square 

foot. 

foot. 

Gloves,  of  kid  or  leather 

30  £ 

50  # 

Bar-iron  *  

§ct.  per  ton 

i  to  lij  cts.  per  Ib. 

Iron  rails      .... 

$12  per  ton 

$14  per  ton 

Steel,    in    ingots,    bars, 

etc              .     .     . 

ii  to  2  cts.  per  Ib. 

2j  to  34  cts.  per  Ib. 

Pig  lead   

I  ct.  per  Ib. 

2  cts.  per  Ib. 

Paper 

qo  % 

oe  of 

Silks    .     . 

J^J  ft 

V>% 

JD  7» 
60  £ 

«2vy  /p 

ww  jo 

1  On  all  forms  of  bar-iron,  band-,  hoop-,  and  boiler-iron,  on  chains, 
anchors,  nails  and  spikes,  pipes,  etc.,  etc.,  the  duties  of  1864  were  in  force 
till  1883. 

TABLE  III. 

Revenue  from  Customs  Duties  and  Internal  Revenue,  1861-1907. 
(00,000  omitted.) 


Year. 

Internal   Revenue. 

Customs   Revenue. 

1861 

None. 

39-6 

2 

" 

49.1 

3 

37.6 

69.1 

4 

109.7 

102.3 

5 

209.5 

84.9 

6 

309.2 

179.0 

7 

266.0 

176.4 

8 

191.1 

164.5 

9 

158.4 

180.0 

APPENDIX. 


455 


TABLE  III. 


Revenue  from  Customs  Duties  and  Internal  Revenue,  1861-1907. 


(00,000  omitted.) 


Year. 

Internal  Revenue. 

Customs  Revenue. 

1870 

184.9 

194-5 

I 

I43.I 

206.3 

2 

130.6 

216.4 

3 

"3-7 

I88.I 

4 

102.4 

163.1 

5 

IIO.O 

157.2 

6 

116.7 

I48.I 

7 

118.6 

I3I.O 

8 

1  10.6 

130.2 

9 

113.6 

137.2 

i  Mo 

124.0 

186.5 

I 

135.3 

198.2 

2 

146.5 

220.4 

3 

144.7 

214.7 

4 

121.  6 

I95.I 

5 

112.5 

I8I.5 

6 

116.8 

192.9 

7 

118.8 

217.3 

8 

124.3 

2I9.I 

9 

130.9 

223.8 

1890 

142.6 

229.7 

i 

145.7 

219.5 

2 

154.0 

177-5 

3 

116.0 

203.4 

4 

147.1 

I3I.8 

i 

143.4 
146.8 

152.2 

160.0 

•j 

146.7 

176.6 

8 

170.9 

149-6 

9 

273.4 

206.1 

1900 

295-3 

233.2 

X 

307.2 

238.6 

2 

271.9 

254.4 

3 

230.8 

284.5 

4 

232.9 

261.3 

5 

234.1 

261.8 

6 

249.1 

300.2 

8 

269.7 
25L7 

332-2 
286.1 

9 

246.2 

300.7 

1910 

269.01 

333-7 

I 

289.01 

314.5 

2 

293.  o1 

*  Exclusive  of  corporation  tax. 


456 


APPENDIX. 
TABLE  IV. 


Production,  Imports^  and  Exports  of  Copper •,  and  Foreign  and 

Domestic  Prices. 
(Quantities  in  gross  tons.) 


Year. 

Domestic 
Product'n. 

Imports. 

Ex- 
ports. 

Price  per  11 

'New  York 
LakeCop'r. 

>.  in  cents.   I 

Difference 
in  Price. 

Copper  in 
Pigs. 

Copper 
Ore. 

London 
Chili  Bars. 

1875 

l8,OOO 

415 

2,300 

2,280 

23 

18 

5 

6 

19,000 

777 

910 

6,430 

21.5 

16.5 

5 

7 

2I,OCO 

750 

15 

6,050 

r9 

14.6 

4-4 

8 

21,500 

I65 

399 

5,040 

16.5 

13-5 

3 

9 

23,000 

70 

100 

7.680 

17.5 

12.2 

5-3 

1880 

27,OOO 

2,350 

2,000 

1,  880 

20 

13-5 

6.5 

i 

32,000 

320 

4,420 

2,  1  60 

18,5 

13-3 

5-2 

2 

41,000 

334 

8,190 

1,490 

18.7 

14.4 

4-3 

3 

52,000 

148 

5001 

3,890 

16.1 

13-7 

2.4 

4 

63,500 

65 

980 

7,610 

13-7 

1  1.  8 

1.9 

5 

74,000 

35 

1,630 

19,900 

ii 

9-5 

1-5 

6 

70,000 

18 

1,840 

10,850 

ii 

8.8 

2.2 

Figures  are  from  "Mineral  Resources  of  the  United 
States,"  pp.  214,  et  seq.  The  production  is  for  the  calen- 
dar year,  the  imports  and  exports  for  the  fiscal  year  (end- 
ing June  3Oth).  The  annual  average  prices  are  from  the 
monthly  prices  given  in  "  Mineral  Resources."  The  fig- 
ures given  in  "  Mineral  Resources  "  seem  to  contain  con- 
siderable understatements,  so  far  as  exports  are  con- 
cerned. See  Eng.  and  M in.  Journal,  Jan.  26,  1884,  p.  59. 

These  tables  show  the  price  in  New  York  to  have  been 
higher  than  that  in  London  by  from  i£  to  5-j-  cents.  In 
recent  years  the  great  increase  in  domestic  production 

1  Beginning  with  1883,  this  column  states  the  quantity  of  copper  con- 
tained in  imported  ore,  not  the  gross  amount  of  ore.  The  8, 190  tons  of  ore 
imported  in  i33'2  contained  about  600  tons  of  copper. 


APPENDIX. 


457 


has  forced  down  the  price  here,  and  the  difference  in  price 
is  not  more  than  \\  cents.  The  better  quality  of  domestic 
Lake  copper  would  cause  it  to  tyring  \\  cents  more  thau 
Chili  bars  under  any  circumstances.  Cost  of  transporta- 
tion (from  London  to  New  York)  is  insignificant.  It  is 
safe  to  say  that  any  difference  in  price  over  and  above  \\ 
cents  per  pound  could  not  exist  if  it  were  not  for  the 
duty  on  copper. 

TABLE  V. 

Production,  Imports,  and  Foreign  and  Domestic  Prices  of 
Steel  Rails. 


Year. 

Product  in 
U.  S., 
Gross 
Tons. 

Imports, 
Gross 
Tons. 

Average 
Price 
in  U.  S. 

Average 
Price  in 
England. 

Average 
Excess  of 
Americar 
Price. 

t       Duty. 

1871 

34,100 

505,500 

$91.70      $57.70 

$34.00     $28.00 

2 

84,000 

474,ooo 

99.70        67.30 

32.40  )  $25.20 

3 

115,200 

231,000 

95-9° 

74-40 

21.50  >  Aug.,  '72,  tc 

4 

129,400 

96,700 

84.70 

57-50 

27.20  )  March,  '75. 

5 

259,700 

17,400 

59-70 

44.10 

15.60 

6 

/>  AQ    ory} 

53.10 

•77  70 

1C.  40 

7 

sSsigoo 

43.50 

3  1  *  /  w 
31.90 

*  0"ATV^ 
I  I.  6O 

$28.00, 

8 
1880 

499,800 
618,800 
864,300 

41.70 
48.20 
67.50 

27.20 
24.70 
36.00 

14.50 
23.50 
3L50 

•Mar.,  '75,  to 
July,  '83. 

39,400 
259,500 

i 

1,210,300 

344,900 

61.10 

31.20 

29.90 

2 

1,304,400 

200,000 

48.50 

30.00 

18.50  J 

3 

1,156,900 

34,800 

37-75 

25.40 

12.35' 

4 

999,400 

2,800 

30.75 

22.9O 

7.85 

5 

963,700 

2,200 

28.50 

23.65 

4.85 

$17.00, 

6 

1,579,400 

41,600 

34.50 

2O.65 

13.85 

-July,  '83,  to 

7 

2,119,000 

I37,8OO 

37.10 

20.65 

16.45 

Oct.,  '90. 

8 

1,391,000 

63,000 

29.80 

19.20 

IO.6O 

9 

1,531,000 

6,200 

29.25 

24.15 

5-ioJ 

1800 

1,871,400 

qj  7C 

27.3O 

*<JVvy 

i 

I  2Q8  QOO 

j*-  •  /  D 
ao  OO 

22.OO 

8  oo    ^I3-44. 

2 

A  ,  ^f<^i»,v^vy\s 

1,541  4OO 

^W.VfW 

<JO  OO 

2O.OO 

10  oo  r^c*'»  '9°'  *° 

3 

•  ,  OT"*'  ,fcrv'v 
1,130,400 

2,900 

J^.  v-"-' 

28.00 

18.50 

9^50]  Aug>'  '94' 

4 

I,OI7,IOO 

24.00 

1*7  ^O 

6.501 

5 

I,3OO,3OO 

1,400 

24.00 

20.00 

4.00  1  $7.84,  from 

6 

I,II7,600 

7,800 

28.00 

21.00 

7-00  j  Aug.,  '94. 

7 

1,630,000 

19.60 

21.00 

—  i.4oj 

458 


APPENDIX. 


TABLE  V .—Continued. 


Year. 

Product  in 
U.  S., 
Gross 
Tons. 

Imports, 
Gross 
Tons. 

Average 
Price 
in  U.  S. 

Average 
Price  in 
England 

Average 
Excess  of 
American 
Price. 

Duty. 

1898 

I  Q77  QOO 

$17  60 

{jtel  en 

Jbc     QO  1 

9 

2,271,100 

2,000 

28.10 

26.80 

i.3Q| 

1900 

2,385,000 

1,500 

32.30 

36.00 

—3-70  | 

i 

2 

3 
A 

2,872,900 
2,941,300 
2,991,800 
2,283,800 

1,900 
63,500 
95,500 
37,700 

27.30 
28.00 
28.00 
28.00 

29.50 
27.40 
28.00 

22.50 

—  2.20  | 
.60  j 

.00  V 

5.50 

$7.84  from 
July,  1897 
to  August, 

5 

3,375,600 

17,300 

28.00 

28.80 

—.80 

1909 

6 

3,977,800 

5,ooo 

28.00 

31.20 

—3.20 

7 

3,632,700 

4,000 

28.00 

32.00 

—  4.00 

8 

1,921,500 

1,700 

28.OO 

29.10 

—  I.IO 

The  figures  for  production  and  importation  are  from 
the  Reports  of  the  American  Iron  and  Steel  Association. 
The  American  prices  are  from  the  same  source,  but  have 
been  reduced  to  a  gold  basis  for  the  years  1871-78.  The 
English  prices  have  been  secured  partly  from  occasional 
tables  given  in  the  Iron  and  Steel  Association  reports, 
partly  from  English  sources.  The  American  prices  are 
those  for  rails  at  the  mills,  in  Pennsylvania ;  the  English 
are  for  rails  free  on  board.  Prices  by  yearly  averages  can 
indicate  only  the  general  fluctuations ;  but  they  suffice 
for  purposes  of  comparison.  Where  the  imports  are  less 
than  1000  tons  in  any  one  year,  they  have  been  omitted. 
Since  1888  the  imports  have  been  sporadic,  and  signify 
little. 

Cost  of  transportation  from  England  to  the  United 
States  has  been  usually  somewhere  between  two  and  four 
dollars  a  ton.  But  sometimes  it  has  been  considerably 


APPENDIX.  459 

less  than  two  dollars ;  and  carriage  by  water  from  Eng- 
land to  places  on  the  seashore  in  the  United  States  has 
not  infrequently  been  cheaper  than  carriage  by  land  from 
the  American  rail-mills  to  such  places. 

It  will  be  observed  that  there  were  three  periods  of 
active  railway  building  and  of  heavy  imports  of  rails: 
1871-74,  1879-82,  1886-88.  During  these  years  or  parts 
of  them,  prices  of  rails  in  the  United  States  were  higher 
than  those  in  England  by  the  full  amount  of  the  duty  for 
the  time  being.  In  most  other  years  they  were  higher, 
but  by  an  amount  less  than  the  duty,  and  imports  ceased, 
except  for  sporadic  shipments  of  special  sizes  or  kinds. 
In  the  later  years,  the  American  prices  came  nearer  and 
nearer  the  English  prices.  In  1897,  prices  fell  abruptly 
in  the  first  two  months  of  the  year,  in  consequence  of  a 
"  steel-rail  war,"  marking  the  breaking  up  of  the  com- 
bination which  had  so  long  kept  prices  up.  After  that 
year,  prices  were  no  higher  in  the  United  States  than  in 
England.  Exports  were  considerable,  much  exceeding 
the  imports. 


INDEX 


Adam  Smith  quoted,  364 
Ad-valorem  duties,   159,  303,  434 
Ad-volorem  duty  on  woollens,  207, 

293,  333,  340,  393,  428 
Administration    section   of    tariff 

of  1913,443 
Agricultural    products,    duty    of 

1883,  248;  of  1890,  274;  in  1909, 

367;  free  in  1913,  443 
Agricultural   implements   free   in 

1913,441 

Aldrich  on  tariff  of  1909,  375 
Average  rates  of  duty,  1860-1912, 

450 


B 


Bar-iron,  duty  of  1883,  244 
Beet-sugar  and   protection,   396, 

426 
Blankets,  duty  of  1867,  205,  214; 

of  1883, 242 


Canada's  tariff  relation  to  U.  S. 

in  1909, 402 
Canada,  reciprocity  treaty  with, 

defeated  in  1910,  414 
Carpets,   duty   of    1867,    214;   of 

1890,266 
Carpet  wool,  duty  of  1867,  201 ;  of 

1883,    239;    of    1890,    257;    of 

1897,  331;  free  in  1913,427 
Charcoal  iron,  54,  131 


Clay  and  the  tariff,  74,  85,  96 
Cleveland,  on  the  tariff,  253,  256; 
does  not  sign  act  of  1894,  290, 
320 

Coal,  duty  in  1872,  185;  in  1894, 
298;  in  1897,  342;  in  1909,  380; 
free  in  1913,  443 

Coffee,  free  in  1846,  114;  duty  re- 
duced in  1870,  179;  repealed,  in 
1872,  184;  expediency  of ,  186 
Colonies,    industrial   state   of,    8 
Compensating    system    on    wool 
and    woollens,    196;    abolished 
1894,  292;  re-established  1897, 
333;  abolished  1913,  429 
"Competitive     tariff"    in     1913, 

418,431 

Compromise  tariff  of  1833,  no 
Conference   committee   on   tariff 
in  1883,  233;  in  1890,  289;  in 
1897,  328;  in  1909,  376;  in  1913, 

41? 

Copper,  duty  of  1869, 219;  of  1883, 
245;  of  1890-97,  272,  343;  sta- 
tistics, 455 

Cost  of  living  and  the  tariff,  410 

Cost  of  production  and  the  tariff, 
363,418 

Cotton  gloves,  duty  of  1909,  402 ; 

Cotton  goods,  duty  of  1816,  30;  of 
1864,  193;  of  1883,  236,  243;  of 
1890,  266;  of  1897,  335;  of 
1909,  37i,  387;  of  1913,  432 

Cotton  manufacture,  1789-1824, 
25;  under  tariff  of  1833,  134; 
in  1846-60,  139;  in  1913,  433 

Cotton  stockings,  duty  of  1890, 
267;  of  1909,  388;  of  1913,  432 


461. 


462 


INDEX 


Crisis,  of  1818,  20,  69,  74;  of  1837, 
116;  of  1857,  118;  of  1893,  322, 

324 
Cuban  sugar    at    reduced    duty, 

399, 425 
Cutlery,  duty  and  manufacture, 

343 

Dawes  on  tariff  of  1872,  182,  185 

Democratic  party,  on  tariff  in 
1883-90,  253;  victorious  in 
1890-92,  284;  divided  in  1896, 
321;  united  in  1913,  416 

Dress  goods  for  women,  duty  of 
1883,  234;  of  1890,  263 

Dumping,  proviso  against  in  1913, 
443  E 

Earthenware,  duties  in  1890-97, 
341;  in  1913,439 


Finkelburg  introduces  bill  of  1872, 

182 
Flannels,  duty  of  1867,  205,  214; 

of  1883,242 
Flax,  duty  of  1828,  90,   105;  of 

1870,  227;  of  1890,  275;  of  1894, 

297;  of  1897,341 
Foreign  trade,  in  1792-1815,  n; 

after  1816,  20,  23;  under  tariff 

of  1846, 121 
Frelinghuysen  on  copper  act  of 

1869,220 
Fruits,  duty  of  1909,  372 


Gallatin,  on  iron  manufacture  in 

1831,128 

Garfield  on  tariff  in  1870,  178 
German  protests  on  tariff  of  1909, 

370 

Glass,  duties  in  1890-97,  341 
Gloves,  duty  of  1909,  372 

H 

Harris,  E.,  on  woollen  duties,  199 
Harrisburg  convention  of  1827,  83 


Harrison,  elected  in  1888,  255;  de- 
feated in  1892,  285 

Hawaiian  sugar  free,  and  effects, 
279, 398 

Hayes,  J.  L.,  on  act  of  1872,  183, 
1 89 ^President  of  Tariff  Com- 
mission (of  1882,  231;  on  tariff 
of  1883,  243,  249 

Hemp,  protected  in  1789,  15; 
duty  of  1828,  90,  105;  char- 
acter of  culture,  90 

Hides  admitted  free  in  1872,  185  ; 
subject  to  duty  in  1897,  332, 
379,  note;  free  again  in  1909, 
378;  free  in  1913,  442 

Home-market  argument  after 
1818,67,70 

Horizontal  reduction,  in  1833, 1 1 1 ; 
in  1872,  189;  proposed  in  1884, 
251 

Hosiery  manufacture  before  1860, 
148.  See  also  Cotton  Stock- 
ings and  Knit  Goods 


Imports,  1860-1912,451 

Imports  affected  by  duties?  120, 

185 
Imports  and  exports,  1791-1814, 

12,23 
Internal-revenue,  acts  of  1862  and 

1864, 161, 165;  amount  of,  1861- 

1912,455 

Internal  taxes  repealed,  172 
Iron,  duties  of  1816,  50;  of  1818, 

51;  of  1824,  52;  of  1828,  52,89; 

of  1846,  124;  of  1870,  179;  of 

1883,  244;  of  1890,  271 ;  of  1894, 

300;  of  1897,  342;  of  1909,  384; 

of  1913,440 
Iron  manufacture,  in  the  colonies, 

47;    in    1789-1838,    49;    under 

acts   of    1842    and    1846,    129; 

since  1870,  270,  301,  344,  384, 

440 
Iron-ore,  duty  in  1861-83,  236;  in 

1890,  271 ;  in  1894,  299;  in  1897, 

342;  in  1909,  380;  free  in  1913, 

440 
Iron  rails  free  in  1833,  56 


INDEX 


463 


Jackson  party  and  tariff  of  1828, 

85 

Jefferson  on  protection,  14 
"Jokers"  in  tariff  of   1909,  376, 

402 
Jute  free  in  1890,  275 


K 


Knit-goods,  duty  in  1890,  267;  in 
1909,388 


Labor  cost  and  duties,   relation 
between,  364, 391 

Lead,  duty  in  1890-97,  343 

Leather  duty  reduced  in  1909, 386 ; 
abolished  in  1913,  443 

' '  Legitimate ' '    industries,    dis- 
cussed in  1913,  419 

Linens,  duty  in  1890,  268;  in  1894, 

T  297jini897,339 
Lowell  founded,  32 


M 


Madison  on  protection,  14 
Mallory  and  the  tariff  of  1828,  83, 

8? 
Marble,  duty  of  1864-70,  224;  of 

1883,247 
Maximum  and  minimum  rates  in 

1909,403 
Michigan  and  beet-sugar  in  1909, 

Mills  bill  of  1888,254 

Minimum  duties  of  1816,  30,  76; 

proposed  in  1820  and  1824,  77; 

in  1827,  80,  83;  in  1828,  93,  103; 

in  1890,  269;  discussed,  81,  104, 

270;  similar  system  in  1890,  269 
Molasses,  duty  of  1828,  93,  100 
Morrill,  J.  S.,  on  tariff  of  1861, 

1 60;  of  1864,  65,  173;  on  marble 

duties,  225 
Morrison,    bill   of    1876,    191;   of 

1884-86,  251;  on  act  of  1883, 

233 


N 


Nickel  duty,  227,  247 

Nippers  and  pliers,  duty  raised  in 

1909, 402 
North,  S.  N.  D.,  394 


Payne  on  tariff  of  1909,  368   ^ 
Philippine  sugar  free  in  1909,  397 
Pig-iron,  see  Iron 
Plate-glass  duties,  341 
Politics  and  the  tariff  of  1828,  84 
Porto  Rico  sugar  free,  398 
Power  loom  introduced,  31,  42 
Prices,  general  rise  of,  not  caused 

by  tariff,  410 
Printing  paper,  duty  of  1897  an(^ 

1909, 392 
Prosperity  affected  by  tariff?  286, 

318,361 

Protection  feeling,  in  1789,  14,  68; 
after  1808,  17;  in  1816,  18,  68; 
strong  after  1818,  23,  69;  de- 
cline after  1832,  64,  106;  after 
the  Civil  War,  173,  190;  in 
1909,408 

"Protection  to  young  industries, 
argument  for,  I ;  applicable  to 
steel  rails  and  copper?  246 


Raw  materials,  effect  of  remitting 
duties,  382 

Razors,  duty  of  1909,  388,  393 

Reciprocity  provisions,  of  1890, 
278;  of  1897,  352;  abolished  in 
1909,407 

Reed  rule  of  1883,  232 

Remissions  of  duty,  effect  of 
partial,  279, 398 

Republican  party,  on  the  tariff 
in  1887-90,  253;  in  1897,  325, 
358;  in  1909,  363,  374;  dissen- 
sions in  1911-1.3,  412,  416 

Revenue    duties    abolished,    189, 

275 

Revenue  from  customs  and  in- 
ternal taxes,  445 


464 


INDEX 


Revenue  from  tariff  uncertain,  355 

Rice,  A.  H.,  on  tariff  of  1851,  150 

Rolled  bar-iron,  duty  on,  59,  62, 

126;  when  first  made  in  U.  S., 

133 
Rugs,  compensating  duty  on,  430 


vSalt  duty  reduced,  185 

Senate,  attitude  on  tariff  in  1909, 

373;  in  1913,  417 
Seward  on  tariff  of  1857,  IJ5 
Sherman,  on  tariff  of  1861,  160; 

on  tea  and  coffee  in  1875,  190 
Shingles,  duty  raised  in  1909,  377 

note 
Shoes,  duty  reduced  in  1909,  386; 

free  in  1913,  443 
Silks,  duty  in  1883,  248;  in  1890, 

268;  in  1894,  297;  in  i897»  336; 

in  1909,  388;  in  1913,  437 
Silver  question  and  the  tariff,  in 

1896,322 

Sinking  fund  in  1875,  190 
South,    against    protection    after 

1820,  73;  on  lumber  duties  in 

1909,383 
Specific  duties,  under  act  of  1833, 

in;  in  1861,  159;  in  1894,  304 
Steel  duty  in  1883,  237 
Steel  rails,  duty  of  1870,  221;  of 

1883,  244;  of  1890,  272;  of  1894, 

301;  of  1897,  342;  °f  1909,  384; 

free   in    1913,  441 ;   growth   of 

manufacture,    346,    385;    sta- 
tistics, 458 
Sugar,    duty  repealed    in    1890, 

275;  bounty  on,  in  1890,  277; 

duty   restored    in     1894,    309; 

in    1897,    348;    in    1909,    396; 

free    in    1913,    416    note,    425; 

reasons   for  and  against,   305 ; 

new  conditions  in  1908,  397;  on 

refined   sugar,   and    the  Sugar 

Trust,  310,350,395 
Sugar,  figures  as  to,  for  1890  and 

1908, 400  note 
Structural   steel,   duty   raised    in 

1909, 402 


Taft,  President,  attitude  on  tariff 
in  1909,  363,  377;  in  1911-13, 
4f3 

Tariff  act,  of  0789,  14;  of  i8i6.  18, 
68;  of  1 82!.  74;  oi  1828".  89:  o*f 
1832,  103,  1 10;  oji&iV.  in;  of 
113;  of  184.6.  114,  156;  o*f 
115,  I577H  1861,  158;  of 

162;  oLl864.  it>4;  of  1870, 

of  1 8  7471 H. ft  of_r£ 

249;  ofTS^O,  256, 


321 


or  1-694..  284, 
,  32%Toi 


1909,  361,  407;'  of 
1913,  409,  448^ 
Tanrl  bills,  of  1820,  70,  72;  of 
1827  (woollens),  80;  of,  1867, 
175;  of  -1872,  182;  of  1878,  1879, 
191  ;  of  1882,  266;  of  1884,  1886, 
251;  of  1888,  254;  of.  1911-13, 

413 
Tariff   board   of  1909,  405,  422, 

424 

Tariff  commission  of  1882,  231 
Tea,  free  in  1846,  114;  duty  re- 

duced, 179;  repealed  1872,  183; 

policy  of,  1  86 
Ten  per  cent,  reduction  of  1872, 

183,  190 
Tin  plates,  duty  in  1861-90,  272; 

in  1894,  302;  in  1897,  347;  in 

1913,441 
"True  principle"  of  protection  as 

proclaimed  in  1909,  363 
Trusts  and  the  tariff,  311,  362,  41  1 

U 

Underwood,  on  tariff  of  1913,  416, 
421,444 

V 

Van  Buren  and  tariff  of  1828,  96, 

IOO,  IOI 

W 

Wages  argument,  appears  about 
1840,  65;  its  position  in  1909, 
366 


INDEX 


465 


Walker,  R.  J.,  and  tariff  of  1846, 
114 

War  finances,  161,  177 

Webster  and  tariff  of  1828,  100, 
101 

Wells,  D.  A.,  on  internal  taxes, 
164;  prepares  bills  of  1867,  176; 
on  copper  veto  of  1869,  220 

Wharton,  J.,  on  nickel  duty,  227 

Wheat,  exports  of,    1803-20,   23 

Whitman,  Wm.,  394 

Wilson  (Representative),  on  tariff 
of  1894,  291 

Wilson  (President)  on  tariff  of 
1913,  416 

Wood,  P.,  introduces  bill  of  1878, 
191 

Wood  pulp  duty  in  1909,  380 

Wool  and  woollens,  duties  of  1816, 
40,  75;  of  1824,  40,  75;  of  1828, 
91,  93;  of  1832,  103,  105;  of 
1846,  114;  of  1857,  150;  of  1861, 
195;  of  1864,  197,  198;  of  1867, 
201,  203;  of  1883,  235,  239,  241; 


of  1890,  256,  259;  of  1894,  291; 
of  1897,  328,  333;  unchanged  in 

1909,  393J  of  1913,427 
Wool,    cheap,    admitted    at    low 

rates,  9 1 
Wool  duty,  economic  aspects  of, 

in  United  States,  239,  258,  291, 

329 
Wool,  duty  in  England  repealed 

1824,  79 

Wool  tops  duty,  394 
Woollen     dress-goods,     duty     of 

1883,  234;  of  1890,  264;  of  1897, 

324 

Worsted  manufacture,  148 
Wright,  Silas,  on  tariff  of  1828,  96 


Young-industries  argument,  i,  64 

Z 
Zinc  ore,  duty  raised  in  1909,  372 


14  DAY  USE 

—  ~~w  mn\x  WHICH  BORROWED 

CIRCULATION  I 

202  Main  Librar 


LOAN  PERIOD  1 
HOME  USE 

4 


ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 
Renewals  and  Recharges  may  be  made  4  days  prior  to  the  due  date 
^m°y  be  Renewed  by  calling        642-3405 


DUE  AS  STAMPED  BELOW 


UNIVERSITY  OF  CALIFORNIA  BERKELEY 
FORM  NO.  DD6  BERKELEY,  CA  94720 

®$ 

r 


XB  65784 


U.C.BERKELEY  LIBRARIES 


THE  UNIVERSITY  OF  CALIFORNIA  LIBRARY 


